Nippon Gear Co., Ltd. (6356) AI Stock Analysis

• Market Cap: ¥25.63B
• Dividend Yield: 0.92%
• Average Volume (3M): 116.20K
• Price to Earnings (P/E): 6.7
• Beta (1Y): 0.53
• Revenue Growth: -1.79%
• EPS Growth: -8.54%
• Country: JP
• Employees: 393
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 32.00
• Shares Outstanding: 14,280,000
• 10 Day Avg. Volume: 161,780
• 30 Day Avg. Volume: 116,203
• PEG Ratio: 6.22
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.72
• P/FCF Ratio: 8.63
• 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): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: ¥1,848.00 ▲(116.65% Upside)
• Action: Reiterated Date: 03/07/26
• Date: Action: Reiterated 03/07/26

The score is driven primarily by strong financial performance (growth, profitability, and cash conversion) and an attractive low P/E valuation. This is tempered by technical indicators showing overbought conditions despite a clear uptrend, which increases near-term downside risk.

Positive Factors

Revenue Growth Trend

Nippon Gear’s high reported revenue growth indicates expanding product adoption and stronger order flow from OEM and industrial customers. Durable revenue expansion supports scale-driven margin improvements, funds reinvestment in manufacturing and engineering, and strengthens competitive positioning over months.

Improving Profitability and Margins

Sustained improvement in gross and net margins plus robust EBIT/EBITDA reflects operational efficiency and cost control in manufacturing. Strong underlying margins increase resilience through cycles, enabling the firm to maintain investment in product development and service capabilities over the medium term.

Cash Generation & Conservative Balance Sheet

Strong operating cash conversion and impressive free cash flow growth combined with low leverage (high equity ratio) provide financial flexibility. This durable cash generation supports capex, R&D and aftermarket service investments while reducing refinancing risk over several quarters.

Negative Factors

Weak Return on Equity

A relatively low ROE despite strong equity capitalization suggests the company may not be generating maximum returns from shareholder capital. Over months this can limit ability to attract equity investment, pressure management to reallocate capital, and indicate scope for efficiency improvements.

End‑market Cyclicality

Concentration in industrial and mobility/OEM end markets exposes revenue and order cycles to capital spending and vehicle production swings. Structural cyclicality can cause multi-month variability in OEM demand and aftermarket timing, challenging revenue predictability and capacity planning.

Limited Segment/Customer Disclosure

Lack of granular public disclosure on segments, product lines and major customers reduces visibility into concentration and competitive dynamics. Over the medium term this increases forecast uncertainty and complicates assessment of durable market share or single-customer dependency risks.

Nippon Gear Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Gear Co., Ltd. designs, produces, and sells valve actuators, screw jacks, gear drives, and gears in Japan and internationally. The company offers valve actuators for a range of applications in petroleum, nuclear, generating plants, and water/sewer pipelines; jacks for use in lifting/lowering, inclines, pulling, opening/closing, adjustment, and holding; gear drives for power plant, chemical plant, waste water treatment plant, and other applications; and gears for automotive, railroad, industrial machine, and other industries. It also provides equipment for communication, control, and detection, including control equipment and control systems, sensor control, and condition monitoring systems. In addition, the company constructs and installs machine instruments; and designs, supervises, operates, and installs electric works. Nippon Gear Co., Ltd. was founded in 1938 and is headquartered in Fujisawa, Japan.

How the Company Makes Money

Nippon Gear makes money primarily through the sale of manufactured products to business customers (typically OEMs and industrial users) and associated engineering/support services tied to those products. Key revenue streams generally include: (1) Product sales of gear-related drive components and assemblies (e.g., geared motors/gear units, actuators, and other motion or power-transmission mechanisms), where revenue is recognized when units are shipped/delivered under customer contracts; (2) Customization and application engineering, where the company adapts standard drive components into customer-specific mechanisms (often bundled into product pricing or billed as separate development/engineering charges when contractually specified); and (3) Aftermarket/spares and maintenance-related parts for installed equipment, which can provide repeat sales over the lifecycle of the customer’s machinery. The company’s earnings are therefore driven by manufacturing margins (materials, machining, assembly, quality control, and scale efficiency), the ability to win recurring OEM supply positions, and the stability of customer production volumes in the end markets it serves. Specific disclosed details such as exact segment revenue mix, major customer names, explicit long-term partnership terms, or pricing/contract structures are null because they are not available from the information provided here.

Nippon Gear Co., Ltd. Financial Statement Overview

Summary

Strong income statement performance with improving net margins and robust EBIT/EBITDA margins (Income Statement Score: 85). Balance sheet is stable with low leverage and a high equity ratio, though ROE is an area to improve (Balance Sheet Score: 75). Cash generation is solid with strong operating cash flow conversion and impressive free cash flow growth (Cash Flow Score: 80).

Income Statement

Nippon Gear Co., Ltd. has shown a strong revenue growth trend over the years, marking a significant increase from 2023 to 2024. The company maintains a healthy gross profit margin, and its net profit margin has improved, reflecting effective cost control and operational efficiency. EBIT and EBITDA margins are robust, suggesting strong operating performance.

Balance Sheet

The balance sheet is strong, with a low debt-to-equity ratio indicating conservative leverage. The equity ratio is high, demonstrating stability with significant stockholders' equity relative to total assets. However, the company's return on equity could be more robust, pointing to potential areas for enhancing shareholder returns.

Cash Flow

Cash flow analysis shows a positive trend, with strong operating cash flow relative to net income, indicating good cash generation capabilities. The free cash flow growth rate is impressive, signaling effective management of capital expenditures and operational efficiency. The company’s ability to convert earnings into free cash flow is commendable.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	9.20B	9.56B	9.62B	7.52B	7.57B	7.72B
Gross Profit	4.23B	4.27B	4.43B	3.14B	2.27B	2.23B
EBITDA	2.10B	2.52B	2.37B	1.20B	683.82M	707.07M
Net Income	1.31B	1.55B	1.54B	685.13M	295.83M	312.53M
Balance Sheet
Total Assets	14.10B	15.42B	14.85B	12.91B	11.37B	11.34B
Cash, Cash Equivalents and Short-Term Investments	4.64B	4.50B	4.48B	4.30B	3.53B	2.95B
Total Debt	402.97M	109.80M	366.46M	511.92M	658.37M	726.48M
Total Liabilities	3.52B	2.86B	3.76B	3.47B	2.57B	2.79B
Stockholders Equity	10.58B	12.56B	11.10B	9.44B	8.79B	8.55B
Cash Flow
Free Cash Flow	0.00	795.46M	421.68M	977.46M	706.17M	590.73M
Operating Cash Flow	0.00	1.29B	748.94M	1.27B	803.87M	721.47M
Investing Cash Flow	0.00	-884.92M	-331.61M	-297.71M	-100.26M	-169.18M
Financing Cash Flow	0.00	-384.31M	-245.05M	-201.18M	-125.11M	-274.49M

Nippon Gear Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 853.00
• 50DMA: Positive
• 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:6356, the sentiment is Positive. The current price of 853 is below the 20-day moving average (MA) of 1576.85, below the 50-day MA of 1185.18, and above the 200-day MA of 831.68, indicating a bullish trend. The MACD of 211.45 indicates Positive momentum. The RSI at 58.20 is Neutral, neither overbought nor oversold. The STOCH value of 30.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6356.

Nippon Gear Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6356	77 Outperform	¥25.63B	6.66	―	0.92%	-1.79%	-8.54%
7296	74 Outperform	¥160.77B	13.70	―	4.47%	2.01%	25.09%
7220	71 Outperform	¥176.15B	-8.32	―	1.93%	-3.23%	24.93%
7231	71 Outperform	¥71.89B	3.21	―	3.66%	-6.79%	303.74%
7278	69 Neutral	¥206.70B	10.65	7.50%	5.39%	-2.26%	―
6473	63 Neutral	¥531.62B	15.03	3.35%	3.18%	0.44%	-11.36%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%