Union Tool Co. (6278) AI Stock Analysis

• Market Cap: ¥120.76B
• Dividend Yield: 1.5%
• Average Volume (3M): 193.44K
• Price to Earnings (P/E): 20.5
• Beta (1Y): 1.03
• Revenue Growth: 21.67%
• EPS Growth: 40.87%
• Country: JP
• Employees: 1,454
• Sector: Industrials
• Sector Strength: 72
• Industry: Manufacturing - Tools & Accessories
• EPS (TTM): 73.22
• Shares Outstanding: 19,780,000
• 10 Day Avg. Volume: 167,400
• 30 Day Avg. Volume: 193,436
• PEG Ratio: 0.23
• Price to Book (P/B): 1.19
• Price to Sales (P/S): 2.66
• P/FCF Ratio: 27.26
• 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: ¥7,584.00
• Price Target Upside: 13.87% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 67 Neutral
• Price Target: ¥7,584.00 ▲(13.87% Upside)

Union Tool Co. has a strong financial foundation with robust revenue growth and solid cash flow management, which are the most significant factors supporting its stock score. However, the technical analysis indicates bearish momentum, and the valuation suggests moderate attractiveness, which slightly dampens the overall score.

Union Tool Co. Business Overview & Revenue Model

Company Description

Union Tool Co. produces and sells cutting tools, linear motion products, and metal machining equipment in Japan and internationally. It offers printed circuit board (PCB) drills/routers; PCB tools-related equipment, such as MDP drill pointers, ring setting machines, non-contact drill diameter/measuring machines, and spindle run out measuring machines; carbide end mills; measuring instruments; rolling dies, forging tools, and coating rods; sensor products, including medical portable electrocardiograph, wearable heart rate sensors, analysis tools, and watching products. The company was formerly known as Union Chemical Research Co., Ltd. and changed its name to Union Tool Co. in 1971. Union Tool Co. was founded in 1955 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Union Tool Co. generates revenue through the sale of its diverse range of cutting tools and industrial supplies. The company's primary revenue streams include direct sales to manufacturers and distributors, as well as a growing online presence that facilitates e-commerce transactions. Additionally, Union Tool Co. benefits from long-term contracts with key clients in the automotive and aerospace industries, providing a stable source of recurring income. Strategic partnerships with other manufacturers and distributors enhance its market reach and customer base, further contributing to its financial performance. The company also invests in research and development to innovate and expand its product line, which can lead to new revenue opportunities.

Union Tool Co. Financial Statement Overview

Summary

Union Tool Co. exhibits a strong financial profile with robust revenue growth, healthy profit margins, and a solid balance sheet. The absence of debt and strong equity position provide financial stability, while positive cash flow trends enhance its capacity for future investments. The company's financial strength positions it well for sustained growth and resilience in the manufacturing sector.

Income Statement

Union Tool Co. demonstrated strong financial performance with impressive revenue growth of 28.67% in 2024 compared to 2023. The company maintained robust profitability with a gross profit margin of 40.28% and a net profit margin of 16.20% in 2024. EBIT and EBITDA margins were also healthy, at 21.10% and 29.90% respectively, indicating efficient operational management. The consistent revenue growth and strong margins suggest a solid business model and competitive positioning in the market.

Balance Sheet

The balance sheet reflects a stable financial position with no debt, leading to a debt-to-equity ratio of 0. The equity ratio stands at an impressive 92.73%, highlighting strong capitalization and low leverage risk. Return on equity was a robust 7.22% in 2024, driven by high net income, indicating effective use of equity capital. These factors contribute to financial stability and lower risk of financial distress.

Cash Flow

Union Tool Co. showed a significant increase in free cash flow, up from ¥228 million in 2023 to ¥3,181 million in 2024, marking a substantial growth. The operating cash flow to net income ratio was 1.38 in 2024, indicating strong cash generation relative to net income. Additionally, the free cash flow to net income ratio of 0.60 suggests solid cash flow management. The positive cash flow trends underscore the company's ability to reinvest in growth opportunities.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	35.06B	32.61B	25.34B	29.09B	28.17B	22.82B
Gross Profit	14.45B	13.13B	8.99B	11.56B	10.57B	7.30B
EBITDA	10.04B	9.82B	6.76B	10.01B	7.87B	6.22B
Net Income	5.61B	5.28B	3.08B	5.00B	3.80B	2.54B
Balance Sheet
Total Assets	80.98B	78.86B	70.61B	69.14B	64.53B	58.03B
Cash, Cash Equivalents and Short-Term Investments	18.50B	18.13B	20.07B	20.97B	17.58B	15.80B
Total Debt	435.00M	427.00M	326.00M	222.00M	313.00M	124.19M
Total Liabilities	6.87B	5.73B	3.33B	5.51B	5.47B	4.07B
Stockholders Equity	74.11B	73.14B	67.28B	63.62B	59.06B	53.97B
Cash Flow
Free Cash Flow	0.00	3.18B	228.00M	4.18B	3.21B	3.50B
Operating Cash Flow	0.00	7.28B	4.69B	6.71B	5.83B	5.07B
Investing Cash Flow	0.00	-7.27B	-5.01B	-1.96B	-3.16B	684.09M
Financing Cash Flow	0.00	-1.68B	-1.61B	-1.55B	-1.44B	-1.11B

Union Tool Co. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6660.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6278, the sentiment is Positive. The current price of 6660 is below the 20-day moving average (MA) of 7318.50, below the 50-day MA of 7704.60, and above the 200-day MA of 5342.94, indicating a neutral trend. The MACD of -314.32 indicates Positive momentum. The RSI at 43.32 is Neutral, neither overbought nor oversold. The STOCH value of 28.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6278.

Union Tool Co. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6101	81 Outperform	¥126.26B	9.94	―	2.45%	28.13%	84.20%
6136	79 Outperform	¥209.96B	14.25	7.86%	2.66%	0.57%	4.54%
6157	70 Outperform	¥18.94B	14.47	―	3.95%	3.38%	-2.80%
6474	69 Neutral	€94.54B	21.40	2.64%	2.52%	-4.11%	46.76%
6278	67 Neutral	¥120.76B	20.50	―	1.50%	21.67%	40.87%
6480	65 Neutral	¥46.97B	22.80	―	3.40%	5.34%	79.88%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Union Tool Co. Corporate Events

Union Tool Co. Announces Treasury Share Disposal for Employee Incentive Plan

Union Tool Co. has announced a plan to dispose of 139,800 treasury shares as part of a restricted stock compensation plan for its employees. This initiative aims to incentivize employees for sustainable corporate value enhancement and align their interests with shareholders. The plan includes a 50-year transfer restriction period for the allotted shares, ensuring long-term value-sharing and commitment from the employees.

Union Tool Co. Revises Financial Forecast and Increases Dividends Amid Strong Demand

Union Tool Co. has reported a significant increase in its financial performance for the first half of FY2025, surpassing its initial forecasts due to heightened demand for package boards and high multilayer boards driven by the adoption of generative AI and favorable currency exchange rates. As a result, the company has revised its full-year financial forecast upwards and announced an increase in both interim and year-end dividends, reflecting its commitment to balancing shareholder returns with growth investments and management stability.