Howa Machinery, Ltd. (6203) AI Stock Analysis

• Market Cap: ¥13.56B
• Dividend Yield: 1.81%
• Average Volume (3M): 467.53K
• Price to Earnings (P/E): 42.8
• Beta (1Y): 1.11
• Revenue Growth: 26.09%
• EPS Growth: N/A
• Country: JP
• Employees: 755
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): -19.94
• Shares Outstanding: 12,548,134
• 10 Day Avg. Volume: 460,380
• 30 Day Avg. Volume: 467,533
• PEG Ratio: -0.11
• Price to Book (P/B): 0.80
• Price to Sales (P/S): 0.60
• P/FCF Ratio: -6.42
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 16,157.21
• Revenue Forecast (FY): ¥4.21T

• Rating: 53 Neutral
• Price Target: ¥1,209.00 ▲(8.92% Upside)

The overall stock score is primarily influenced by strong revenue growth and improved profitability, which are positive indicators. However, significant cash flow challenges and a high P/E ratio suggest caution. Technical indicators show bearish momentum, further impacting the score.

Positive Factors

Revenue Growth

Strong revenue growth indicates robust demand for Howa Machinery's products, suggesting effective market strategies and product relevance.

Profitability Improvement

Improved profitability reflects better cost management and operational efficiency, enhancing long-term financial health.

Moderate Leverage

Moderate leverage provides financial flexibility, allowing Howa Machinery to invest in growth opportunities without excessive risk.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow indicates challenges in cash generation, potentially limiting investment capacity and financial resilience.

Low Cash Generation

Low cash generation relative to profits suggests inefficiencies in converting earnings into cash, impacting liquidity and operational flexibility.

Modest Return on Equity

Modest ROE indicates limited effectiveness in using equity capital to generate profits, potentially affecting investor confidence and capital attraction.

Howa Machinery, Ltd. Business Overview & Revenue Model

Company Description

Howa Machinery, Ltd. (6203) is a Japanese company specializing in the manufacturing and distribution of precision machinery and equipment. The company operates primarily in the sectors of machine tools and industrial machinery, providing a range of products that include CNC lathes, machining centers, and other automated systems. With a commitment to innovation and quality, Howa Machinery serves various industries, including automotive, aerospace, and general manufacturing.

How the Company Makes Money

Howa Machinery generates revenue through the sale of its machinery and equipment, which are primarily targeted at industrial clients in need of precision manufacturing solutions. The company’s revenue model is largely based on direct sales of its products, complemented by after-sales services such as maintenance, parts, and technical support. Key revenue streams include the sale of CNC machines, which are crucial for modern manufacturing processes, as well as contracts for long-term service agreements with clients. Additionally, Howa Machinery has established significant partnerships with various industry players, enhancing its market presence and expanding its customer base, which contributes positively to its earnings.

Howa Machinery, Ltd. Financial Statement Overview

Summary

The company exhibits strong revenue growth and improved profitability, with a revenue increase of 25.5% and a net profit margin recovery to 3.0%. However, cash flow remains a concern due to negative free cash flow, which could hinder future operations and growth.

Income Statement

The company has shown a strong revenue growth rate of 25.5% from 2024 to 2025, indicating robust demand. Gross profit margin for 2025 is 16.9%, reflecting decent cost management. However, the net profit margin improved to 3.0% from a negative position, highlighting recovery from previous losses. The EBIT margin is 5.0%, while the EBITDA margin is 6.9%, both showing improvement but still modest. Overall, the company is recovering well with significant revenue growth and improved profitability metrics.

Balance Sheet

The debt-to-equity ratio stands at 0.43, indicating a moderate leverage level. Return on Equity (ROE) for 2025 is 4.0%, reflecting a modest return for shareholders. The equity ratio is 55.0%, showing a stable equity base compared to total assets. While leverage is manageable, the ROE could be improved to enhance shareholder returns.

Cash Flow

The free cash flow remains negative, but there is a slight improvement in operating cash flow. The operating cash flow to net income ratio is 0.07, indicating low cash generation relative to profits. The free cash flow to net income ratio is negative, signaling challenges in converting net income into free cash flow. Cash flow stability is a concern, with negative free cash flow persisting.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	25.46B	24.83B	19.79B	19.74B	19.70B	18.77B
Gross Profit	4.49B	4.20B	3.49B	3.63B	3.96B	3.48B
EBITDA	2.14B	1.72B	-189.00M	1.14B	1.42B	1.41B
Net Income	894.00M	749.00M	-873.00M	524.00M	1.06B	968.00M
Balance Sheet
Total Assets	34.44B	34.05B	30.29B	27.62B	27.67B	26.46B
Cash, Cash Equivalents and Short-Term Investments	5.71B	2.92B	3.90B	3.33B	4.42B	3.46B
Total Debt	7.73B	7.97B	6.24B	3.52B	3.27B	4.15B
Total Liabilities	15.64B	15.31B	12.96B	10.27B	10.78B	10.35B
Stockholders Equity	18.79B	18.74B	17.33B	17.35B	16.89B	16.11B
Cash Flow
Free Cash Flow	0.00	-2.32B	-2.23B	-1.14B	2.38B	-2.02B
Operating Cash Flow	0.00	55.00M	-1.07B	-506.00M	3.05B	-1.27B
Investing Cash Flow	0.00	-2.55B	-871.00M	-608.00M	-544.00M	-635.00M
Financing Cash Flow	0.00	1.49B	2.48B	22.00M	-1.61B	1.88B

Howa Machinery, Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1110.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6203, the sentiment is Negative. The current price of 1110 is below the 20-day moving average (MA) of 1214.15, below the 50-day MA of 1280.96, and below the 200-day MA of 1169.93, indicating a bearish trend. The MACD of -64.78 indicates Positive momentum. The RSI at 40.45 is Neutral, neither overbought nor oversold. The STOCH value of 58.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6203.

Howa Machinery, Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6373	79 Outperform	¥14.64B	12.42	―	1.76%	1.61%	117.39%
6317	78 Outperform	¥16.45B	5.03	―	3.49%	-3.27%	572.42%
6496	76 Outperform	¥20.46B	14.74	―	1.77%	34.70%	-8.44%
6224	72 Outperform	¥17.43B	14.11	―	2.02%	24.02%	8.22%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6210	57 Neutral	¥13.60B	-28.46	―	5.18%	1.46%	89.88%
6203	53 Neutral	¥13.56B	42.77	―	1.81%	26.09%	―

Howa Machinery, Ltd. Corporate Events

Howa Machinery Reports Mixed Financial Results for Q2 2025

Howa Machinery, Ltd. reported a 9.9% increase in net sales for the second quarter of 2025 compared to the same period in 2024. However, the company experienced a significant decline in operating profit and profit attributable to owners of the parent, with decreases of 40.0% and 80.6%, respectively. Despite these challenges, the company’s comprehensive income rose by 50.2%, indicating some positive aspects in their financial performance. The capital adequacy ratio improved slightly, suggesting a stable financial position.

The most recent analyst rating on (JP:6203) stock is a Hold with a Yen1599.00 price target. To see the full list of analyst forecasts on Howa Machinery, Ltd. stock, see the JP:6203 Stock Forecast page.