Howa Machinery, Ltd. (6203) AI Stock Analysis

• Market Cap: ¥12.15B
• Dividend Yield: 2.04%
• Average Volume (3M): 290.70K
• Price to Earnings (P/E): 15.8
• Beta (1Y): 1.10
• Revenue Growth: 25.48%
• EPS Growth: N/A
• Country: JP
• Employees: 755
• Sector: Industrials
• Sector Strength: 86
• Industry: Industrial - Machinery
• EPS (TTM): -8.36
• Shares Outstanding: 12,548,134
• 10 Day Avg. Volume: 300,410
• 30 Day Avg. Volume: 290,700
• PEG Ratio: -1.01
• Price to Book (P/B): 0.72
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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

• Rating: 57 Neutral
• Price Target: ¥1,053.00 ▲(7.56%Upside)

The overall score is driven by strong financial performance with significant revenue growth and profitability recovery. However, persistent cash flow challenges and bearish technical indicators weigh on the outlook. Valuation is fair but not compelling enough to offset other concerns.

Howa Machinery, Ltd. Business Overview & Revenue Model

Company Description

Howa Machinery, Ltd. (6203) is a Japanese company specializing in the manufacturing and sale of machine tools and firearms. The company's core products include industrial machinery such as automatic lathes, and production machines, as well as sporting and hunting firearms. Howa Machinery is recognized for its precision engineering and innovation in both the industrial machinery and firearms sectors.

How the Company Makes Money

Howa Machinery, Ltd. generates revenue primarily through the sale of its machine tools and firearms. The company's machine tools division focuses on providing high-precision industrial equipment to various manufacturing industries, which constitutes a significant portion of its revenue. In the firearms segment, Howa produces sporting rifles and shotguns that are popular among hunting and shooting enthusiasts, contributing to its earnings. Additionally, Howa may engage in partnerships or collaborations with other firms to expand its market reach and enhance product offerings, further bolstering its revenue streams.

Howa Machinery, Ltd. Financial Statement Overview

Summary

Howa Machinery, Ltd. exhibits strengths in revenue growth and a solid equity base, yet faces profitability and cash flow challenges. Operational efficiency needs improvement to enhance net margins and cash generation. While leverage is moderate, liquidity constraints could pose risks if not addressed.

Income Statement

The TTM (Trailing-Twelve-Months) data shows a decline in net income with a negative margin of -1.07%. Despite a decent gross profit margin of 19.06% and positive revenue growth of 10.82% from the previous annual report, the company struggles with net profitability. EBIT margin stands at 5.58% and EBITDA margin at 8.45%, indicating operational challenges.

Balance Sheet

The balance sheet reflects a stable equity base with a debt-to-equity ratio of 0.36, showing moderate leverage. Return on Equity is negative due to the net loss, but the equity ratio is strong at 56.27%, indicating financial stability and low risk of insolvency.

Cash Flow

Cash flow statements reveal challenges, with zero operating cash flow in the TTM period. The company previously had negative free cash flow, reflecting potential constraints in liquidity and capital management.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	21.93B	19.79B	19.74B	19.70B	18.77B	20.32B
Gross Profit	4.18B	3.49B	3.63B	3.96B	3.48B	3.90B
EBITDA	1.85B	-189.00M	959.00M	1.42B	1.01B	1.25B
Net Income	-235.00M	-873.00M	524.00M	1.06B	968.00M	591.00M
Balance Sheet
Total Assets	33.10B	30.29B	27.62B	27.67B	26.46B	24.11B
Cash, Cash Equivalents and Short-Term Investments	2.89B	3.90B	4.43B	5.55B	4.62B	3.51B
Total Debt	6.79B	6.24B	3.52B	3.27B	4.15B	2.03B
Total Liabilities	14.47B	12.96B	10.27B	10.78B	10.35B	9.12B
Stockholders Equity	18.62B	17.33B	17.35B	16.89B	16.11B	14.99B
Cash Flow
Free Cash Flow	0.00	-2.23B	-1.14B	2.38B	-2.02B	204.00M
Operating Cash Flow	0.00	-1.07B	-506.00M	3.05B	-1.27B	1.19B
Investing Cash Flow	0.00	-871.00M	-608.00M	-544.00M	-635.00M	-1.05B
Financing Cash Flow	0.00	2.48B	22.00M	-1.61B	1.88B	35.00M

Howa Machinery, Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 979.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 979 is below the 20-day moving average (MA) of 1029.15, below the 50-day MA of 1049.16, and below the 200-day MA of 1079.37, indicating a bearish trend. The MACD of -17.00 indicates Positive momentum. The RSI at 39.51 is Neutral, neither overbought nor oversold. The STOCH value of 2.13 is Positive, 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	81 Outperform	¥12.22B	9.60		2.23%	2.63%	268.28%
6317	80 Outperform	¥12.79B	10.13		3.66%	-6.96%	-1.72%
6496	80 Outperform	¥14.64B	10.46		357.18%	20.91%	18.64%
6224	78 Outperform	¥13.73B	12.19		2.43%	16.80%	29.50%
Sector *	65 Neutral	$10.77B	15.80	5.51%	1.90%	3.03%	-26.66%
6203	57 Neutral	¥12.15B	15.76		2.04%	25.48%	―
6210	54 Neutral	¥12.68B	―		5.66%	-6.30%	34.61%