Obara Group Incorporated (6877) AI Stock Analysis

• Market Cap: ¥101.58B
• Dividend Yield: 3.85%
• Average Volume (3M): 20.19K
• Price to Earnings (P/E): 12.8
• Beta (1Y): 0.53
• Revenue Growth: 9.38%
• EPS Growth: 8.88%
• Country: JP
• Employees: 1,711
• Sector: Industrials
• Sector Strength: 72
• Industry: Manufacturing - Tools & Accessories
• EPS (TTM): 126.36
• Shares Outstanding: 20,869,380
• 10 Day Avg. Volume: 22,760
• 30 Day Avg. Volume: 20,186
• PEG Ratio: 1.12
• Price to Book (P/B): 0.91
• Price to Sales (P/S): 1.10
• P/FCF Ratio: 41.97
• 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: 74 Outperform
• Price Target: ¥7,101.00 ▲(85.40% Upside)
• Action: Reiterated Date: 03/03/26
• Date: Action: Reiterated 03/03/26

The score is driven primarily by strong financial performance, especially a conservative, stable balance sheet, tempered by weaker free cash flow trends. Valuation is reasonable with a solid dividend yield. Technicals show strong trend strength but appear overextended based on RSI and stochastic readings, adding near-term risk.

Positive Factors

Conservative balance sheet

Very low leverage and a healthy equity base materially reduce financial risk and improve resilience across multi-month industry cycles. This capital structure supports financing for installations, aftermarket support, dividends or selective investments without pressuring liquidity, aiding durable stability.

Consistent revenue growth and healthy gross margin

Sustained top-line growth paired with a roughly 33% gross margin indicates persistent demand for core welding equipment and efficient cost management. These operating fundamentals underpin steady earnings generation and leave room to absorb input cost swings while preserving long-term profitability.

Diverse, recurring revenue streams

A business mix of equipment sales, bespoke systems engineering, and recurring aftermarket services creates customer stickiness and recurring cash flow. The installed base drives parts and service demand, smoothing revenue over OEM capex cycles and supporting long-term cash generation.

Negative Factors

Declining free cash flow conversion

Weaker free cash flow growth and reduced conversion from earnings to cash limit internal funding for R&D, capital equipment for customers, and shareholder returns. Over several months this can constrain strategic investments and reduce buffer against demand slowdowns.

Pressure on net profitability

A declining net margin signals mounting cost or pricing pressure that, if persistent, will erode retained earnings and reinvestment capacity. Structural margin compression reduces flexibility for competitive pricing, innovation spending, and sustained dividend or capex programs.

Cyclicality tied to automotive capex

Heavy reliance on automotive OEM and supplier capex makes new equipment sales lumpy and tied to model cycles and plant investments. While aftermarket revenue helps, core demand remains cyclical, producing revenue volatility and planning challenges across a 2–6 month horizon.

Obara Group Incorporated Business Overview & Revenue Model

Company Description

Obara Group Incorporated engages in the manufacture and sale of resistance welder, arc welder, laser equipment, polisher, cleaner/washer, and the consumables in Japan and internationally. The company offers resistance welding systems to weld metal sheets mainly of car bodies; arc welders to weld steel parts by melting welding wires. It also provides polishing equipment for electronic and precision industries, such as polishers for material substrates used for electronic components on PC, mobile phones, etc.; cleaners to clean minute particles off from parts, such as memory disks, flat panel displays, and other opto-electronic parts; laser equipment for the local welding of various metals; and consumable sets, including slurry, abrasives, carriers, pads, and plates for various applications. Obara Group Incorporated was founded in 1955 and is headquartered in Yamato, Japan.

How the Company Makes Money

Obara Group generates revenue primarily through the sale of its welding and cutting equipment and systems, which include both standard and customized products tailored to specific industrial applications. The company also earns income from providing maintenance services, technical support, and training related to the operation of its equipment. Key revenue streams include direct sales to manufacturers, long-term contracts with major automotive and electronics companies, and partnerships with distributors and service providers. Additionally, Obara Group invests in research and development to create innovative products that meet evolving market demands, thus contributing to its overall earnings growth.

Obara Group Incorporated Financial Statement Overview

Summary

Strong overall fundamentals supported by consistent revenue growth and healthy operating margins. Balance sheet is a key strength with very low leverage (debt-to-equity 0.11). Main offset is weaker cash flow quality, with declining free cash flow growth and reduced conversion of earnings into cash.

Income Statement

Obara Group Incorporated has demonstrated consistent revenue growth over the years, with a notable increase of 1.59% in the latest period. The company maintains a healthy gross profit margin of approximately 33%, indicating efficient cost management. However, the net profit margin has slightly decreased to 10.96% from previous years, suggesting some pressure on profitability. The EBIT and EBITDA margins remain strong, reflecting robust operational performance.

Balance Sheet

The balance sheet of Obara Group is solid, with a low debt-to-equity ratio of 0.11, indicating conservative leverage and financial stability. The return on equity is reasonable at 9.07%, showing effective use of shareholder funds. The equity ratio stands at a healthy level, underscoring the company's strong capital structure and low financial risk.

Cash Flow

The cash flow statement reveals a decline in free cash flow growth, which could be a concern for future investments and liquidity. The operating cash flow to net income ratio is moderate, suggesting adequate cash generation from operations. The free cash flow to net income ratio has decreased, indicating potential challenges in converting earnings into cash.

Breakdown	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	61.68B	56.39B	55.21B	50.28B	45.48B
Gross Profit	20.36B	17.93B	17.52B	16.82B	14.69B
EBITDA	12.25B	11.23B	11.65B	11.27B	10.50B
Net Income	6.76B	6.72B	7.21B	6.20B	5.99B
Balance Sheet
Total Assets	103.83B	100.81B	94.62B	92.35B	78.41B
Cash, Cash Equivalents and Short-Term Investments	26.18B	42.41B	39.29B	36.87B	26.70B
Total Debt	7.94B	8.07B	2.03B	6.74B	6.84B
Total Liabilities	29.15B	27.01B	20.51B	28.69B	24.24B
Stockholders Equity	74.53B	73.73B	74.03B	63.59B	54.10B
Cash Flow
Free Cash Flow	1.62B	5.13B	4.37B	4.99B	8.30B
Operating Cash Flow	5.11B	8.36B	5.30B	6.66B	9.88B
Investing Cash Flow	-18.52B	-3.72B	5.13B	68.00M	-546.00M
Financing Cash Flow	-6.10B	-1.81B	-2.60B	-3.03B	-5.89B

Obara Group Incorporated Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3830.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6877, the sentiment is Positive. The current price of 3830 is below the 20-day moving average (MA) of 4677.75, below the 50-day MA of 4174.00, and below the 200-day MA of 3962.87, indicating a bullish trend. The MACD of 539.34 indicates Negative momentum. The RSI at 84.23 is Negative, neither overbought nor oversold. The STOCH value of 87.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6877.

Obara Group Incorporated Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6101	83 Outperform	¥191.17B	12.31	―	2.33%	25.95%	66.92%
6877	74 Outperform	¥101.58B	12.81	―	3.85%	9.38%	8.88%
6278	70 Outperform	¥284.88B	44.51	―	1.17%	29.51%	48.81%
6480	67 Neutral	¥71.88B	18.92	―	2.82%	8.75%	177.16%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6474	62 Neutral	¥127.96B	23.00	2.64%	2.30%	-4.11%	46.76%
6472	52 Neutral	¥246.19B	-18.45	-7.84%	3.08%	-3.18%	-531.48%

Obara Group Incorporated Corporate Events

Obara Group Delivers Strong Q1 but Keeps Cautious Full-Year Profit Outlook

Obara Group reported strong results for the first quarter of the fiscal year ending September 30, 2026, with net sales climbing 39.6% year on year to ¥18.4 billion and net income up 30.1% to ¥1.9 billion, boosting earnings per share to ¥126.36. The company’s financial position also improved, as total assets rose to ¥106.6 billion and the shareholders’ equity ratio edged up to 72.1%, while management kept its full-year forecast unchanged, signaling confidence in meeting targets despite anticipating a modest decline in full-year profit growth.

The group plans to maintain an annual dividend of ¥150 per share for FY2026, matching the previous year’s payout and underlining its commitment to shareholder returns. Forecasts call for full-year net sales of ¥63.9 billion, up 3.6%, but a 6.8% decline in net income to ¥6.3 billion, suggesting that higher costs or market normalization may weigh on margins even as revenues grow, a dynamic investors will watch closely for its impact on future earnings quality and capital allocation.

The most recent analyst rating on (JP:6877) stock is a Hold with a Yen4271.00 price target. To see the full list of analyst forecasts on Obara Group Incorporated stock, see the JP:6877 Stock Forecast page.