Nippon Signal Company, Limited (6741) AI Stock Analysis

• Market Cap: ¥78.59B
• Dividend Yield: 3.73%
• Average Volume (3M): 148.54K
• Price to Earnings (P/E): 9.7
• Beta (1Y): 0.64
• Revenue Growth: 5.62%
• EPS Growth: 28.00%
• Country: JP
• Employees: 2,946
• Sector: Industrials
• Sector Strength: 72
• Industry: Railroads
• EPS (TTM): 28.78
• Shares Outstanding: 68,339,710
• 10 Day Avg. Volume: 135,480
• 30 Day Avg. Volume: 148,543
• PEG Ratio: 0.11
• Price to Book (P/B): 0.54
• Price to Sales (P/S): 0.52
• P/FCF Ratio: 30.82
• 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: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 83 Outperform
• Price Target: ¥1,413.00 ▲(14.69% 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.

Positive Factors

Revenue Growth

The significant revenue growth indicates robust demand for the company's products and services, suggesting a strong market position and potential for continued expansion.

Balance Sheet Health

A low debt-to-equity ratio highlights conservative financial management, providing the company with flexibility to invest in growth opportunities without excessive financial risk.

Cash Flow Generation

Strong free cash flow growth enhances the company's ability to reinvest in its business, pay down debt, or return capital to shareholders, supporting long-term financial health.

Negative Factors

Cash Flow Efficiency

The moderate free cash flow to net income ratio suggests there is room for improvement in converting earnings into cash, which could impact the company's ability to fund future growth.

Profit Margin Pressure

While the company is profitable, a net profit margin of 7.96% indicates potential pressure on profitability, which could affect future earnings if costs rise or revenue growth slows.

Industry Competition

Operating in a competitive industry like railroads may pressure margins and require continuous innovation and investment to maintain market position and profitability.

Nippon Signal Company, Limited Business Overview & Revenue Model

Company Description

Nippon Signal Co., Ltd. manufactures and sells railway signal, traffic information, automatic fare collection (AFC), parking information, visionary business center (VBC), and communications-based train control systems. Its railway signaling systems include operational control and automatic train protection systems; and devices, such as interlocking systems that control railway point machines and signal lights, as well as track circuits, level crossing, brake shoes, and LED information boards. The company's traffic information systems comprise universal traffic management systems, local controllers, LED traffic signal lights, LED pedestrian crossing signals, image expression pedestrian detection devices, and service area information boards. Its AFC systems consists of station platform safety sensing systems, station platform screen door systems, passenger support robots, automatic passenger gates, automatic ticket vending machines, automatic fare adjustment machines, security gates, and explosive detection security gates; and VBC products comprising 3D laser ranging image sensors and ground penetrating radars. The company's parking information systems include floor parking available lights, vehicle body detecting sensors, local controllers, supervisory and control equipment, exit caution lights, emitters and receivers, loop coils, each floor parking available lights, entry/exit gate parking management systems, parking fee collection systems, park-loc systems, and bicycle lock systems. Nippon Signal Co., Ltd. was incorporated in 1928 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Nippon Signal generates revenue primarily through the sale of its signaling and communication systems to railway operators and infrastructure companies. Key revenue streams include the direct sales of equipment, installation services, and ongoing maintenance contracts. The company also benefits from long-term partnerships with various railway operators in Japan and internationally, which provide stable revenue sources through service agreements and upgrades. Additionally, Nippon Signal may engage in research and development collaborations with governmental and private institutions, further enhancing its revenue potential through innovative solutions and technologies.

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: Positive
• Last Price: 1232.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6741, the sentiment is Positive. The current price of 1232 is above the 20-day moving average (MA) of 1230.40, below the 50-day MA of 1239.67, and above the 200-day MA of 1072.21, indicating a neutral trend. The MACD of -2.46 indicates Negative momentum. The RSI at 49.74 is Neutral, neither overbought nor oversold. The STOCH value of 45.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	¥78.59B	9.70	―	3.73%	5.62%	28.00%
9044	78 Outperform	¥314.01B	12.99	―	1.71%	6.55%	-12.49%
9049	71 Outperform	¥14.47B	8.01	―	0.27%	1.75%	-8.92%
9052	65 Neutral	¥44.75B	10.71	―	2.23%	4.37%	54.12%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
9033	63 Neutral	¥18.28B	10.82	―	1.32%	1.70%	1841.47%
9046	59 Neutral	¥19.38B	15.36	―	0.83%	1.24%	19.78%

Nippon Signal Company, Limited Corporate Events

Nippon Signal Announces Interim Dividend Distribution

Nippon Signal Co., Ltd. announced a resolution to distribute interim dividends, with a record date of September 30, 2025, and a dividend per share of 13 yen. This decision aligns with the company’s strategy of balancing growth investments and shareholder returns, aiming to maintain a stable financial position and a consolidated dividend payout ratio of 35.8%.

Nippon Signal Reports Strong Half-Year Financial Results

Nippon Signal Co., Ltd. reported its consolidated financial results for the six months ending September 30, 2025, showing a 9.3% increase in net sales compared to the previous year. Despite a slight decrease in operating profit, the company saw a significant rise in comprehensive income, indicating strong overall performance. The company also announced no revisions to its financial forecast for the fiscal year ending March 31, 2026, suggesting stable expectations for future growth.