Hitachi,Ltd. (6501) AI Stock Analysis

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Hitachi,Ltd.

(OTC:6501)

Rating:79Outperform

Price Target:

¥4,708.00

▲(14.11%Upside)

Hitachi's overall stock score of 79 reflects its strong financial performance and strategic initiatives that position it well for future growth. The positive momentum in the stock price is a significant factor, though caution is warranted due to overbought technical indicators. Valuation remains a concern with a high P/E ratio, but the company's robust earnings call guidance and commitment to innovation and shareholder value mitigate some risks.

Positive Factors

Cash Flow

The company is expected to have a robust increase in core free cash flow during FY3/26-28, indicating strong cash generation capabilities.

Financial Performance

Analysts forecast strong growth in adjusted EBITA margin, reaching 14.2% in FY3/28 from 10.8% in FY3/25.

Leadership

The new CEO is expected to reveal a constructive business strategy that demonstrates Hitachi's competitiveness against overseas peers.

Negative Factors

Investor Sentiment

The market had a tepid response to the nomination of the new CEO, suggesting that Hitachi needs to provide a constructive medium-term profit outlook to attract investors.

Management Strategy

Management's conservatism in its operating margin targets for Digital Systems & Services and Green Energy & Mobility may lead to missing the consensus forecast.

Stock Price Reaction

Hitachi's share price dropped after the nomination of the new CEO was revealed ahead of the official release.

Hitachi,Ltd. (6501) vs. iShares MSCI Japan ETF (EWJ)

Market Cap

$18.68T

Dividend Yield1.08%

Average Volume (3M)11.16M

Price to Earnings (P/E)30.5

Beta (1Y)1.58

Revenue Growth0.56%

EPS Growth5.32%

CountryJP

Employees268,655

SectorIndustrials

Sector Strength88

IndustryConglomerates

Share Statistics

EPS (TTM)40.35

Shares Outstanding4,581,561,000

10 Day Avg. Volume12,816,220

30 Day Avg. Volume11,160,570

Financial Highlights & Ratios

PEG Ratio0.79

Price to Book (P/B)1.39

Price to Sales (P/S)0.00

P/FCF Ratio16.53

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$4,850.23

Price Target Upside17.55% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Hitachi,Ltd. Business Overview & Revenue Model

Company DescriptionHitachi, Ltd. provides information technology, energy, industry, mobility, and smart life solutions in Japan and internationally. The company offers information and telecommunication services, such as internet of things, storage systems, servers, software, ATMs, and scanners for manufacturing, communication, finance, healthcare and life science, energy and transportation, and distribution industries, as well as government and urban sectors; drone platform and unmanned aerial system traffic management solutions; infrastructure information systems; and consulting and system integration services. It also operates nuclear power plants, power grides, wind turbines, and power generation systems; provides energy and equipment management services; power semiconductors; elevators, escalators and moving sidewalk, and control elevator systems; and transportation systems. In addition, the company offers medical equipment for radiation therapy, In-vitro diagnosis, and regenerative medicines; automotive systems; home appliances; and water treatment solutions for water supply and sewage infrastructure, industrial water treatment, seawater desalination, and water recycling, as well as maintenance and repair services. Further, it manufactures and sales air and centrifugal compressors, blowers, electrical machinery control systems, fans, pumps, pharmaceutical manufacturing execution systems, induction motors, industrial computers and controllers, inverters, logistics and marking systems, IGBT drives, motors, nitrogen gas generators, rope and chain hoist, PCS, UPS, switches and breakers, steel systems, and transformers. Additionally, the company offers functional components and equipment, power electronic and magnetic materials, wires, and cable and related products; optical disk drives; and property management services. Hitachi, Ltd. was founded in 1910 and is headquartered in Tokyo, Japan.

How the Company Makes MoneyHitachi, Ltd. generates revenue through a diverse set of business units that cater to various industries and markets. The company's revenue model is primarily based on delivering technology-driven products and services. Key revenue streams include IT services and solutions, which encompass consulting, system integration, and managed services, contributing significantly to its earnings. The Social Infrastructure segment, involving projects in transportation, power, and water systems, also plays a crucial role in revenue generation. Additionally, the company earns from its High Functional Materials & Components segment, which supplies essential materials and components to the automotive and electronics industries. Strategic partnerships and collaborations with businesses and governments worldwide further enhance its market position and contribute to its financial performance. Hitachi's focus on innovation and sustainability often leads to the development of new technologies and services, continuously expanding its revenue potential.

Hitachi,Ltd. Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q4-2024)

% Change Since: 10.20%|

Next Earnings Date:Jul 25, 2025

Earnings Call Sentiment Positive

Hitachi demonstrated strong financial performance with significant revenue and EBITA growth, driven largely by the expansion of its Lumada business and robust performance in its DSS and Energy segments. However, challenges such as the decline in the Chinese market and potential impacts from U.S. tariffs present notable risks. The establishment of the Strategic SIB unit and commitment to shareholder returns through substantial share buybacks reflect proactive management strategies to drive future growth.

Q4-2024 Updates

Positive Updates

Record Revenue Growth

Hitachi achieved a 14% year-on-year increase in revenues and an adjusted EBITA of over JPY1.1 trillion, marking a significant improvement in profitability with an adjusted EBITA margin of 11.7%.

Lumada Business Expansion

The Lumada business continues to be a key growth driver, with revenues increasing by 29% year-on-year, and Hitachi aims for Lumada to represent over 50% of total revenues by 2027 with an EBITA margin of over 18%.

Strategic Share Buybacks

Hitachi announced a JPY300 billion share buyback, reflecting a commitment to shareholder returns and financial discipline.

Strong Performance in DSS and Energy Segments

DSS and Energy segments showed robust growth, with DSS revenue increasing by 9% and Energy revenue projected to grow by 12% in FY 2025.

Establishment of Strategic SIB Unit

Hitachi has set up a new Strategic SIB unit directly under the CEO to focus on new business opportunities, with plans to invest up to JPY500 billion during the Inspire 2027 period.

Negative Updates

Challenges in the Chinese Market

Connective Industries (CI) segment faces a projected 2% decrease in revenue due to the decline in the Chinese real estate market affecting building systems.

Impact of U.S. Tariffs

The potential impact of U.S. tariffs poses a risk of JPY350 billion, affecting sectors like power grids and railways, necessitating supply chain restructuring and cost mitigation strategies.

Uncertainty in Global Economy

Despite strong growth in several segments, Hitachi acknowledges the growing uncertainty in the global economy which could impact future performance.

Company Guidance

During the briefing on Hitachi Group's new management plan, Inspire 2027, and the consolidated financial results for the year ended March 31, 2025, several important financial metrics and goals were outlined. The company aims for sustainable revenue growth of 7% to 9% and an adjusted EBITA margin of 13% to 15%. Additionally, they target a cash flow conversion rate of over 90% and an ROIC of 12% to 13%. Specific targets for the Lumada business include achieving a revenue ratio of over 50% and an EBITA margin of over 18%. Looking further ahead, the goal is for Lumada to represent 80% of total revenues with an adjusted EBITA margin exceeding 20%. The focus on the Lumada business is part of Hitachi's strategy to transform into a digital-centric company, leveraging AI and domain knowledge to enhance digital services and generate value across various industries. The company's commitment to investing in growth while maintaining financial discipline is reflected in their capital allocation plans, which emphasize strengthening the Lumada business and considering shareholder returns through stable dividends and flexible share buybacks.

Hitachi,Ltd. Financial Statement Overview

Summary

Overall, Hitachi showcases a robust financial profile with consistent revenue growth, strong profitability margins, and effective cash flow management. The company maintains a low debt profile, ensuring financial stability and flexibility. While there is potential for optimizing liability management, the overall financial health supports a positive outlook for future growth.

Income Statement

Very Positive

Hitachi has demonstrated strong performance with consistent revenue growth, evidenced by a 0.56% increase from 2024 to 2025 and solid margins. The gross profit margin stands at 28.83%, and the net profit margin is 6.29%. The company maintains a stable EBIT margin of 9.93% and a robust EBITDA margin of 14.27% for 2025, reflecting efficient operational management and cost control.

Balance Sheet

Positive

The balance sheet remains strong with a debt-to-equity ratio of 0.21, indicating low leverage and sound financial management. Return on Equity (ROE) is impressive at 10.53%, highlighting effective use of equity. The equity ratio of 44.01% signifies a stable financial foundation, although there is room for improvement in reducing total liabilities.

Cash Flow

Very Positive

Hitachi's cash flow position is solid, with a free cash flow growth rate of 61.91% from 2024 to 2025. The operating cash flow to net income ratio is 1.90, and the free cash flow to net income ratio is 1.50, indicating strong cash generation relative to earnings, which supports future investments and debt servicing.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
9.78T	9.73T	10.88T	10.26T	8.73T
	Gross Profit
2.82T	2.58T	2.69T	2.56T	2.20T
	EBIT
636.79B	755.82B	942.26B	738.24B	495.18B
	EBITDA
1.40T	1.35T	1.47T	1.37T	1.32T
	Net Income Common Stockholders
615.72B	589.90B	649.12B	583.47B	501.61B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
866.24B	1.04T	1.18T	1.35T	1.34T
	Total Assets
13.28T	12.22T	12.50T	13.89T	11.85T
	Total Debt
1.21T	1.18T	2.21T	3.13T	2.40T
	Net Debt
339.87B	474.65B	1.38T	2.16T	1.38T
	Total Liabilities
7.25T	6.36T	7.17T	8.53T	7.39T
	Stockholders Equity
5.85T	5.70T	4.94T	4.34T	3.53T
Cash Flow		Free Cash Flow
925.39B	571.47B	416.46B	290.08B	420.18B
	Operating Cash Flow
1.17T	956.61B	827.04B	729.94B	793.13B
	Investing Cash Flow
-530.10B	-131.54B	151.06B	-1.05T	-458.84B
	Financing Cash Flow
-467.68B	-1.02T	-1.14T	202.74B	-184.84B

Hitachi,Ltd. Technical Analysis

Technical Analysis Sentiment

Positive

Last Price4126.00

Price Trends

50DMA

3647.58

Positive

100DMA

3758.96

Positive

200DMA

3770.84

Positive

Market Momentum

MACD

106.82

Negative

RSI

65.06

Neutral

STOCH

80.77

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6501, the sentiment is Positive. The current price of 4126 is above the 20-day moving average (MA) of 3941.50, above the 50-day MA of 3647.58, and above the 200-day MA of 3770.84, indicating a bullish trend. The MACD of 106.82 indicates Negative momentum. The RSI at 65.06 is Neutral, neither overbought nor oversold. The STOCH value of 80.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6501.

Hitachi,Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6501	79 Outperform	$18.68T	30.55	10.50%	1.08%	0.56%	5.32%
Sector *	66 Neutral	$4.51B	12.29	5.40%	3.67%	4.15%	-12.21%
ITOCF		$73.75B	12.80	15.55%	2.58%	―	―
MARUF		$33.03B	9.98	13.98%	3.36%	―	―
MITSF		$57.95B	10.24	11.74%	3.24%	―	―
MSBHF		$76.95B	12.73	10.17%	3.37%	―	―
SSUMF		$30.35B	8.23	12.19%	3.46%	―	―

* Industrials Sector Average

Performance Comparison

JP:6501

Hitachi,Ltd.

4,126.00

774.34

23.10%

ITOCF

Itochu

52.18

6.38

13.93%

MARUF

Marubeni

20.07

1.94

10.70%

MITSF

Mitsui & Co

20.25

-2.68

-11.69%

MSBHF

Mitsubishi

19.88

0.69

3.60%

SSUMF

Sumitomo

25.04

0.96

3.99%

Hitachi,Ltd. Corporate Events

Hitachi Unveils Investor Day 2025 Materials

Jun 10, 2025

Hitachi, Ltd. announced the release of presentation materials for its upcoming ‘Hitachi Investor Day 2025,’ focusing on its Connective Industries Business Strategy. This disclosure is part of Hitachi’s efforts to engage stakeholders and provide insights into its strategic direction, potentially impacting its market positioning and operational focus.