Nippon Signal Company, Limited (6741) AI Stock Analysis

• Market Cap: ¥77.09B
• Dividend Yield: 3.76%
• Average Volume (3M): 152.50K
• Price to Earnings (P/E): 9.5
• Beta (1Y): 0.63
• Revenue Growth: 7.16%
• EPS Growth: 26.28%
• Country: JP
• Employees: 2,946
• Sector: Industrials
• Sector Strength: 72
• Industry: Railroads
• EPS (TTM): -6.42
• Shares Outstanding: 68,339,710
• 10 Day Avg. Volume: 183,580
• 30 Day Avg. Volume: 152,503
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: ¥1,413.00
• Price Target Upside: 14.88% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 83 Outperform
• Price Target: ¥1,413.00 ▲(14.88% Upside)

Nippon Signal Company receives a strong overall score driven by robust financial performance, positive technical indicators, and attractive valuation. The company's strong revenue growth, solid balance sheet, and efficient cash flow management contribute significantly to its financial health. The technical analysis supports a bullish outlook, and the stock's valuation metrics suggest it is undervalued, providing a compelling investment opportunity.

Nippon Signal Company, Limited Business Overview & Revenue Model

Company Description

Nippon Signal Company, Limited (6741) is a Japanese corporation primarily engaged in the development and production of various signal systems. The company operates in sectors including transportation, industrial, and public infrastructure, with its core products and services encompassing railway signal systems, traffic management systems, and industrial automation solutions. Known for its innovative technologies, Nippon Signal plays a crucial role in the safety and efficiency of transportation networks and industrial operations.

How the Company Makes Money

Nippon Signal Company, Limited generates revenue through the sale and maintenance of its signal systems and related technologies. Key revenue streams include contracts with railway operators and public transportation agencies for the installation and maintenance of railway signal systems. Additionally, the company earns from providing traffic management systems to municipalities and governments for road safety and efficiency. Industrial clients contribute to revenue by purchasing automation solutions that enhance operational productivity. Strategic partnerships with transportation and industrial sector leaders, along with a focus on technological innovation, further bolster the company's earnings.

Nippon Signal Company, Limited Financial Statement Overview

Summary

Nippon Signal Company demonstrates strong financial health with robust revenue growth and profitability. The balance sheet is solid with low leverage, and cash flow metrics show positive trends. The company is well-positioned in the railroads industry, with opportunities for further cash flow optimization.

Income Statement

Nippon Signal Company shows strong revenue growth with a TTM increase of 31.8%, indicating robust demand in the railroads industry. The company maintains healthy profitability with a gross profit margin of 24% and a net profit margin of 7.96%. EBIT and EBITDA margins are also solid at 10.42% and 12.71% respectively, reflecting efficient operations and cost management.

Balance Sheet

The balance sheet is stable with a low debt-to-equity ratio of 0.19, suggesting conservative leverage. Return on equity stands at 8.70%, indicating effective use of equity to generate profits. The equity ratio is strong, highlighting a solid capital structure and financial stability.

Cash Flow

Cash flow performance is improving, with a significant free cash flow growth of 347.49% in the TTM period. The operating cash flow to net income ratio is 1.54, indicating good cash generation relative to net income. However, the free cash flow to net income ratio is moderate at 0.31, suggesting room for improvement in cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	108.27B	106.86B	98.54B	85.46B	85.05B	92.75B
Gross Profit	25.69B	25.68B	21.59B	20.05B	19.57B	19.81B
EBITDA	14.31B	14.41B	10.46B	8.46B	8.80B	9.38B
Net Income	8.10B	8.50B	5.35B	4.08B	4.50B	4.92B
Balance Sheet
Total Assets	147.15B	166.24B	165.29B	146.02B	134.09B	141.36B
Cash, Cash Equivalents and Short-Term Investments	12.02B	11.29B	11.80B	8.41B	6.40B	13.30B
Total Debt	5.51B	19.21B	18.71B	17.53B	11.95B	16.56B
Total Liabilities	45.40B	63.61B	68.47B	56.67B	47.35B	56.66B
Stockholders Equity	101.75B	102.62B	96.82B	89.35B	86.74B	84.69B
Cash Flow
Free Cash Flow	8.10B	1.81B	2.86B	-904.00M	-199.00M	-1.72B
Operating Cash Flow	12.48B	5.78B	6.77B	1.72B	2.10B	1.15B
Investing Cash Flow	-4.94B	-4.50B	-2.98B	-3.60B	-2.34B	-1.91B
Financing Cash Flow	-8.41B	-1.60B	-338.00M	3.91B	-6.75B	1.35B

Nippon Signal Company, Limited Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1230.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6741, the sentiment is Neutral. The current price of 1230 is below the 20-day moving average (MA) of 1241.25, above the 50-day MA of 1215.08, and above the 200-day MA of 1007.13, indicating a neutral trend. The MACD of 10.64 indicates Positive momentum. The RSI at 49.35 is Neutral, neither overbought nor oversold. The STOCH value of 18.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:6741.

Nippon Signal Company, Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6741	83 Outperform	¥77.09B	9.52	―	3.76%	7.16%	26.28%
9044	74 Outperform	¥303.19B	12.96	―	1.77%	7.02%	-11.48%
9049	70 Outperform	¥13.72B	7.66	―	0.29%	1.27%	-6.53%
9052	68 Neutral	¥45.71B	12.15	―	1.93%	2.43%	34.21%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
9033	63 Neutral	¥18.58B	12.55	―	1.31%	6.14%	191.46%
9046	61 Neutral	¥19.52B	16.27	―	0.83%	-0.12%	10.36%

Nippon Signal Company, Limited Corporate Events

Nippon Signal Reports Increased Sales but Declining Profits in Q1 2025

Nippon Signal Co., Ltd. reported its consolidated financial results for the three months ending June 30, 2025, showing an 8.5% increase in net sales compared to the previous year. Despite this growth, the company experienced a decline in operating profit and profit attributable to owners, indicating challenges in maintaining profitability. The company also announced the inclusion of six new companies in its consolidation scope, which may impact future financial performance and strategic direction.

Nippon Signal Abolishes Anti-Takeover Measures and Amends Articles of Association

Nippon Signal Co., Ltd. announced the abolition of its Anti-Takeover Measures, which were initially renewed in 2022, following a decision by its Board of Directors. This decision reflects the company’s consideration of shareholder opinions and recent developments in takeover policies. The company plans to amend its Articles of Association to remove provisions related to these measures, ensuring that future large-scale acquisitions will be managed in compliance with relevant laws to protect shareholder interests.

Nippon Signal Announces Increased Year-End Dividends

Nippon Signal Co., Ltd. announced a resolution to distribute year-end dividends, with a record date of March 31, 2025, at 33 yen per share, marking an increase from the previous year. This decision aligns with the company’s strategy to balance growth investments and shareholder returns, aiming for a stable earnings structure and a strong financial position, with a target dividend payout ratio of 30% or higher.

Nippon Signal Reports Strong Financial Performance for FY 2025

Nippon Signal Company, Limited reported a significant increase in its consolidated financial results for the fiscal year ended March 31, 2025, with net sales rising by 8.4% and operating profit increasing by 45.2% compared to the previous year. The company’s strong performance is reflected in its improved capital adequacy ratio and higher dividends, indicating a robust financial position and positive outlook for stakeholders.