Universal Entertainment (6425) AI Stock Analysis

• Market Cap: ¥55.09B
• Dividend Yield: N/A
• Average Volume (3M): 325.74K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.01
• Revenue Growth: -14.08%
• EPS Growth: 54.85%
• Country: JP
• Employees: 7,437
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Leisure
• EPS (TTM): -2849.06
• Shares Outstanding: 80,195,000
• 10 Day Avg. Volume: 497,540
• 30 Day Avg. Volume: 325,740
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.48
• Price to Sales (P/S): 0.50
• P/FCF Ratio: 24.73
• 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): 70.1
• Revenue Forecast (FY): ¥186.91B

• Rating: 42 Neutral
• Price Target: ¥714.00 ▼(-6.67% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by weak and highly volatile financial performance (sharp profit deterioration and balance-sheet weakening in 2025). Technicals reinforce the cautious view with a clear downtrend and negative momentum, while valuation offers limited support due to negative earnings and no dividend yield data.

Positive Factors

Diversified revenue streams

Universal operates two distinct businesses — pachislot/pachinko machine development and overseas integrated-resort operations — providing structural diversification. This mix reduces single-market exposure, balancing cyclical hardware sales with recurring property revenues and supporting resilience over a multi-month horizon.

Historically strong gross profit levels

The company’s historical gross-profit strength indicates durable unit-level economics in its manufacturing and product mix. Strong gross margins give room to absorb SG&A and investment in new models or IR operations, improving the odds of margin recovery when volumes normalize.

Demonstrated cash-generation in select years

Despite uneven results, the company has shown it can convert earnings to cash in multiple years and produced positive FCF again in 2025. This demonstrates an underlying ability to self-fund operations or partial investment cycles, which supports medium-term operational sustainability.

Negative Factors

Severe revenue and profit volatility

Revenue and profitability swings have been large and recent: back-to-back declines and a very large 2025 loss weaken predictability for cash flow and planning. This volatility hampers long-term budgeting, supplier and partner confidence, and increases execution risk for product and IR investments.

Balance-sheet deterioration in 2025

The 2025 drop in equity combined with higher debt reduces financial flexibility and raises solvency risk. Weaker capitalization limits the company's ability to fund IR expansions or new machine development internally, likely increasing reliance on external financing or asset sales.

Inconsistent cash conversion and funding uncertainty

Alternating periods of positive and meaningfully negative free cash flow create uncertainty around the company’s ability to sustain investment, service debt, or rebuild equity. This inconsistent conversion of earnings into cash is a structural risk for multi-quarter planning and capital allocation.

Universal Entertainment Business Overview & Revenue Model

Company Description

Universal Entertainment Corporation (6425) is a Japanese company primarily engaged in the development, manufacturing, and distribution of gaming machines and entertainment products. The company operates in two main sectors: the gaming and amusement machine industry, where it produces pachinko and pachislot machines, and the casino sector, where it is involved in the development and management of integrated resorts. Universal Entertainment also engages in the production of various entertainment-related products and services, aiming to enhance the overall gaming experience.

How the Company Makes Money

Universal Entertainment generates revenue through multiple streams, primarily from the sales of pachinko and pachislot machines to operators in Japan and other markets. In addition to machine sales, the company earns income from the operation of its integrated resort projects, which include hotels, restaurants, and entertainment facilities, particularly in the Philippines. Partnerships with local and international gaming operators further bolster its revenue, allowing for shared resources and expanded market reach. The company also benefits from licensing agreements and potential revenue sharing from its gaming technology innovations, contributing to its overall financial performance.

Universal Entertainment Financial Statement Overview

Summary

Recent fundamentals are weak and volatile: revenue declined in 2024 and again in 2025, EBIT turned negative in 2025, and net income swung from profitability (2022–2023) to losses in 2024 and a very large loss in 2025. The balance sheet also deteriorated in 2025 with a sharp drop in equity and higher debt, while cash flow remains inconsistent despite some recovery in operating/free cash flow in 2025.

Income Statement

Profitability has been volatile and has deteriorated recently. Revenue declined in 2024 and fell again in 2025 (annual revenue growth of about -29% in 2024 and -221% in 2025), while operating performance weakened from positive EBIT in 2023–2024 to negative EBIT in 2025. Most notably, net results swung from solid profitability in 2022–2023 to losses in 2024, and a very large net loss in 2025, signaling elevated earnings risk despite historically strong gross profit levels.

Balance Sheet

Leverage was moderate in 2022–2024 with debt-to-equity around ~0.45–0.51, and the company operated with a sizable equity base in those years. However, 2025 shows a sharp step-down in equity alongside higher debt, which likely reduces balance-sheet flexibility and increases financial risk. Total assets also declined meaningfully versus prior years, reinforcing a weaker balance-sheet trajectory into 2025.

Cash Flow

Cash generation is inconsistent. Operating cash flow was strong in 2022–2023, but dropped sharply in 2024 and then recovered in 2025; free cash flow has alternated between positive (2022–2023 and 2025) and meaningfully negative (2020–2021 and 2024). This uneven conversion of earnings into cash—especially during loss years—adds uncertainty around funding capacity and reinvestment flexibility.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	125.60B	122.83B	126.33B	179.00B	141.00B	90.44B
Gross Profit	72.61B	71.98B	75.10B	99.33B	78.34B	46.54B
EBITDA	14.14B	14.63B	30.64B	71.25B	41.23B	14.06B
Net Income	-25.97B	-231.43B	-15.57B	28.44B	11.51B	-19.05B
Balance Sheet
Total Assets	594.41B	373.63B	632.79B	628.01B	596.18B	572.38B
Cash, Cash Equivalents and Short-Term Investments	26.16B	40.12B	24.07B	46.75B	38.07B	31.22B
Total Debt	173.68B	255.31B	187.43B	174.93B	173.53B	171.84B
Total Liabilities	242.10B	243.94B	263.06B	239.62B	246.86B	233.46B
Stockholders Equity	352.31B	129.69B	369.73B	388.39B	349.31B	338.92B
Cash Flow
Free Cash Flow	0.00	2.49B	-7.04B	16.28B	16.43B	-6.92B
Operating Cash Flow	0.00	11.05B	1.52B	28.02B	24.46B	1.75B
Investing Cash Flow	0.00	-3.92B	-13.37B	-10.12B	-9.00B	-7.04B
Financing Cash Flow	0.00	9.25B	-9.80B	-11.33B	-11.25B	-1.82B

Universal Entertainment Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 765.00
• 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:6425, the sentiment is Negative. The current price of 765 is above the 20-day moving average (MA) of 739.60, below the 50-day MA of 773.24, and below the 200-day MA of 897.10, indicating a bearish trend. The MACD of -16.36 indicates Positive momentum. The RSI at 36.59 is Neutral, neither overbought nor oversold. The STOCH value of 28.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6425.

Universal Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4680	67 Neutral	¥285.20B	29.55	―	1.51%	11.92%	33.70%
9166	67 Neutral	¥114.53B	20.09	―	―	62.69%	-37.72%
6238	64 Neutral	¥32.56B	9.47	―	3.63%	2.20%	2.39%
7832	62 Neutral	$2.63T	18.69	15.67%	1.94%	9.86%	-1.06%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
6412	53 Neutral	¥195.00B	6.91	5.03%	4.02%	45.31%	-36.42%
6425	42 Neutral	¥55.09B	-0.27	-1.85%	―	-14.08%	54.85%