Howa Machinery, Ltd. (6203) AI Stock Analysis

• Market Cap: ¥15.13B
• Dividend Yield: 1.64%
• Average Volume (3M): 441.42K
• Price to Earnings (P/E): 16.4
• Beta (1Y): 1.07
• Revenue Growth: 29.02%
• EPS Growth: N/A
• Country: JP
• Employees: 755
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 28.76
• Shares Outstanding: 12,548,134
• 10 Day Avg. Volume: 349,720
• 30 Day Avg. Volume: 441,416
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: ¥1,678.00
• Price Target Upside: 38.68% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 72 Outperform
• Price Target: ¥1,678.00 ▲(38.68% Upside)

The stock's overall score is driven by strong technical indicators and reasonable valuation. While financial performance shows significant revenue growth and profitability improvements, cash flow challenges remain a concern. The absence of earnings call and corporate events data limits further insights.

Howa Machinery, Ltd. Business Overview & Revenue Model

Company Description

Howa Machinery, Ltd. provides machine tools, pneumatic and hydraulic equipment, electronic machines, sweepers, metal joinery fittings, and firearms in Japan. The company's machine tools include machining centers, transfer lines, and standard machine tool units for transfer lines; and pneumatic and hydraulic equipment comprising power chucks, rotating cylinders, rodless slit and magnetic type cylinders, hydraulic and pneumatic clamp cylinders, hydraulic jig cylinders, rotary actuators, and hydraulic cylinders. It also provides electronic machines, which include exposure systems for printed circuit boards, ceramic green sheet-related equipment, and testing systems for mounted circuit boards; and street and industrial sweepers, and scrubbers, as well as sporting rifles. The company was formerly known as Howa Heavy Industries, Ltd. and changed its name to Howa Machinery, Ltd. in 1945. Howa Machinery, Ltd. was incorporated in 1907 and is headquartered in Kiyosu, Japan.

How the Company Makes Money

Howa Machinery, Ltd. generates revenue through the sale of its diverse range of products across different sectors. Key revenue streams include the production and sale of machine tools which are used in various manufacturing processes, the manufacture of automotive components supplied to major automobile manufacturers, and the production of firearms and defense equipment. The company also benefits from partnerships with other industrial firms and government contracts, particularly in the defense sector. These partnerships and contracts contribute significantly to its earnings by ensuring a steady demand for its products.

Howa Machinery, Ltd. Financial Statement Overview

Summary

The company demonstrates strong revenue growth and improved profitability, with a revenue increase of 25.5% and a net profit margin improvement to 3.0%. However, cash flow challenges persist, with negative free cash flow indicating potential issues in funding 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	24.83B	24.83B	19.79B	19.74B	19.70B	18.77B
Gross Profit	4.20B	4.20B	3.49B	3.63B	3.96B	3.48B
EBITDA	1.72B	1.72B	-189.00M	1.14B	1.42B	1.41B
Net Income	749.00M	749.00M	-873.00M	524.00M	1.06B	968.00M
Balance Sheet
Total Assets	34.05B	34.05B	30.29B	27.62B	27.67B	26.46B
Cash, Cash Equivalents and Short-Term Investments	2.92B	2.92B	3.90B	3.33B	4.42B	3.46B
Total Debt	7.97B	7.97B	6.24B	3.52B	3.27B	4.15B
Total Liabilities	15.31B	15.31B	12.96B	10.27B	10.78B	10.35B
Stockholders Equity	18.74B	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: Neutral
• Last Price: 1210.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6203, the sentiment is Neutral. The current price of 1210 is below the 20-day moving average (MA) of 1351.75, below the 50-day MA of 1221.14, and above the 200-day MA of 1152.34, indicating a neutral trend. The MACD of 2.56 indicates Positive momentum. The RSI at 40.09 is Neutral, neither overbought nor oversold. The STOCH value of 14.40 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	¥14.60B	15.28	3.88%	1.87%	2.44%	163.48%
6224	77 Outperform	¥23.43B	16.52	23.38%	1.50%	22.80%	39.62%
6203	72 Outperform	¥15.13B	16.44	―	1.64%	29.02%	―
6317	71 Outperform	¥15.91B	5.44	2.99%	3.53%	-6.23%	405.48%
6496	68 Neutral	¥18.14B	10.35	6.80%	1.97%	27.72%	70.12%
6210	54 Neutral	¥14.07B	-29.45	-4.93%	5.10%	-1.14%	68.17%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Howa Machinery, Ltd. Corporate Events

Howa Machinery Reports Robust Financial Growth in June 2025 Quarter

Howa Machinery, Ltd. reported a significant increase in its quarterly financial performance for June 2025, with net sales rising by 13.9% and operating profit surging by 238.3% compared to the previous year. This positive financial outcome reflects the company’s strong operational efficiency and market demand, positioning it favorably within the industry and potentially benefiting its stakeholders.