Obara Group Incorporated (6877) AI Stock Analysis

• Market Cap: ¥85.08B
• Dividend Yield: 3.85%
• Average Volume (3M): 20.19K
• Price to Earnings (P/E): 7.6
• Beta (1Y): 0.50
• 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: 1.11
• 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: ¥5,947.00 ▲(55.27% 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

Obara's very low leverage and healthy equity base provide durable financial stability, lowering refinancing and interest risk. That capital conservatism supports steady investment in equipment R&D, iterative product support and resilience through industry downturns without stressing cash flows.

Consistent revenue growth

Sustained top-line expansion shows enduring customer demand for welding systems and integration services. Strong revenue growth improves scale economics for manufacturing and service parts, supports recurring aftermarket sales, and underpins medium-term investment capacity and margin stability.

Healthy margins and operating strength

A ~33% gross margin and robust operating margins indicate pricing power and efficient production for specialized welding equipment. Durable margin structure funds engineering, aftermarket service capability and maintains profitability even when new equipment orders vary across OEM cycles.

Negative Factors

Declining free cash flow conversion

Weakening conversion of earnings into free cash flow constrains the company's ability to self-fund capex, expand services, or increase dividends. Over months this reduces flexibility to pursue larger system projects or absorb delayed customer payments without tapping external financing.

Net profit margin pressure

A declining net margin signals rising costs or pricing pressure that, if persistent, will erode retained earnings and cash generation. Sustained margin compression would limit capacity to invest in product upgrades and aftermarket service expansion, slowing long-term earnings growth.

Exposure to automotive capex cyclicality

Dependence on OEM and supplier capex creates structural revenue volatility as production model changes and plant investments are lumpy. This cyclicality produces uneven order flows and aftermarket demand, complicating capacity planning and making multi-quarter revenue visibility limited.

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 makes money primarily by selling resistance welding equipment and systems to manufacturers (notably automotive OEMs and their suppliers) that require high-throughput, repeatable welding processes in body-in-white and related assembly operations. Key revenue streams typically include: (1) equipment sales—revenue from delivering welding guns, welding controllers, transformers, and other components, as well as integrated welding cells/lines; (2) systems/engineering revenue—fees tied to designing, integrating, and commissioning welding systems tailored to a customer’s production requirements; and (3) aftermarket/service revenue—ongoing income from replacement parts, consumables related to welding operations, repairs, maintenance, and technical support for installed equipment. Earnings are influenced by customer capital-expenditure cycles in automotive and general industrial manufacturing, model changeovers and plant investments, and the scale of installed base that drives recurring parts and service demand. Specific partnership details: null.

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	19.90B	17.63B	17.29B	16.51B	14.41B
EBITDA	11.81B	10.60B	10.46B	9.93B	8.66B
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	8.00B	8.11B	2.11B	6.77B	6.88B
Total Liabilities	29.15B	27.00B	20.51B	28.69B	24.24B
Stockholders Equity	74.53B	73.73B	74.04B	63.59B	54.10B
Cash Flow
Free Cash Flow	1.62B	5.25B	4.45B	5.04B	8.35B
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: Neutral
• Last Price: 3830.00
• 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:6877, the sentiment is Neutral. The current price of 3830 is below the 20-day moving average (MA) of 5796.00, below the 50-day MA of 4706.30, and below the 200-day MA of 4123.09, indicating a neutral trend. The MACD of 221.89 indicates Positive momentum. The RSI at 48.16 is Neutral, neither overbought nor oversold. The STOCH value of 3.25 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	¥162.86B	7.03	―	2.33%	25.95%	66.92%
6278	76 Outperform	¥256.03B	24.11	―	1.17%	29.51%	48.81%
6877	74 Outperform	¥85.08B	7.58	―	3.85%	9.38%	8.88%
6136	72 Outperform	¥235.48B	13.29	7.86%	2.55%	0.57%	4.54%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6474	62 Neutral	¥111.43B	17.03	2.64%	2.30%	-4.11%	46.76%
6141	57 Neutral	¥355.05B	15.50	11.46%	3.77%	-9.34%	164.21%

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.