DENSO (6902) AI Stock Analysis

• Market Cap: ¥6.12T
• Dividend Yield: 2.98%
• Average Volume (3M): 5.54M
• Price to Earnings (P/E): 16.1
• Beta (1Y): 1.20
• Revenue Growth: 2.41%
• EPS Growth: 11.03%
• Country: JP
• Employees: 162,029
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 52.42
• Shares Outstanding: 2,910,979,700
• 10 Day Avg. Volume: 5,690,590
• 30 Day Avg. Volume: 5,540,833
• PEG Ratio: 0.33
• Price to Book (P/B): 1.07
• Price to Sales (P/S): 0.74
• P/FCF Ratio: 14.07
• 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: ¥2,187.26
• Price Target Upside: -1.72% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 4
• EPS Forecast (FY): 168.82
• Revenue Forecast (FY): ¥7.31T

• Rating: 67 Neutral
• Price Target: ¥2,231.00 ▲(0.25% Upside)
• Action: Downgraded Date: 02/05/26
• Date: Action: Downgraded 02/05/26

The score is driven primarily by strong financial fundamentals (improving margins and low leverage), partially offset by weaker cash flow conversion and bearish technical momentum. Valuation is supportive with a mid-teens P/E and ~3.1% dividend yield.

Positive Factors

Conservative balance sheet

Low leverage and a sizeable equity base provide durable financial flexibility for an auto supplier facing cyclical OEM demand. This balance-sheet strength supports multi-year program delivery, funds capex/R&D for electrification, and reduces refinancing and solvency risk through downturns.

Multi-year margin improvement

Sustained margin recovery over multiple years indicates structural improvement in product mix and pricing power, likely from higher-value electronics and system integration. Higher, durable margins strengthen cash generation potential and capacity to reinvest in EV/ADAS capabilities.

Consistent revenue expansion

Material multi-year revenue growth reflects program wins and rising content per vehicle from electrification and ADAS trends. Program-based, B2B contracts create revenue durability across model cycles, supporting steady top-line scaling as EV/hybrid adoption increases globally.

Negative Factors

Weaker free cash flow conversion

Lower and inconsistent free cash flow conversion versus earnings reduces the firm's ability to self-fund sizable capex and R&D required for electrification. Volatility in FCF complicates capital allocation, may force intermittent external financing, and raises execution risk over cycles.

Recent EPS decline

Negative EPS growth signals recent profit normalization or margin pressure despite revenue gains. Persistent EPS declines can limit retained earnings for reinvestment, constrain dividend sustainability, and indicate sensitivity to input costs, FX, or OEM demand shifts over coming quarters.

Only moderate capital efficiency

Mid-to-high single-digit ROE implies only moderate efficiency converting equity into profits. With heavy R&D and capex needs for EV and ADAS transitions, subpar ROE may signal competitive pricing pressure or slower margin capture, limiting long-term shareholder return potential.

DENSO Business Overview & Revenue Model

Company Description

DENSO Corporation develops, manufactures, and sells automotive parts in Japan, rest of Asia, North America, Europe, and internationally. It offers air-conditioning systems, including heat pump air-conditioning systems, control system and refrigerant products, air-conditioning system heat exchangers, bus air-conditioning systems, automotive freezers, and cooling products, as well as heating, ventilation, and air-conditioning units. The company also provides gasoline, diesel, hybrid, electric vehicle, and fuel cell vehicle power-train systems, as well as motor generators, power control units, and emission control components; and safety and cockpit systems, such as driving environment recognition, vehicle dynamic control, collision safety, visibility support, cockpit information, and information security systems, as well as other products. In addition, it offers automotive service parts and accessories comprising spark plugs, oil and cabin air filters, wiper blades, air filter elements, starters, alternators, compressors, oxygen sensors, fuel pumps, air conditioner service parts, radiators, condensers, Plasmacluster ion generators, air conditioners for busses and construction vehicles, driver status monitors, and truck refrigeration products, as well as refrigerant recovery, recycling, and charging machines; and repair and support products and services. Further, the company provides industrial solutions for factories in automotive parts production; agricultural solutions, including Profarm Controller, a climate control system for greenhouse; and household air conditioning equipment and industrial systems. DENSO Corporation was incorporated in 1949 and is based in Kariya, Japan.

How the Company Makes Money

DENSO makes money primarily through the design, manufacture, and sale of automotive components and systems to major automobile manufacturers worldwide. Its revenue model is heavily reliant on its position as a Tier 1 supplier to leading automakers, providing essential components such as engine management systems, air conditioning units, and various electronic and safety systems. Key revenue streams include its powertrain systems, which improve fuel efficiency and reduce emissions, and its thermal systems, which manage vehicle climate control. DENSO also generates income from its aftermarket services, offering repair and maintenance parts for vehicles. Significant partnerships with automotive giants, along with continuous investment in research and development for next-generation automotive technologies, further bolster its revenue. The company's commitment to innovation in areas like electrification, autonomous driving, and connectivity plays a crucial role in sustaining its competitive edge and profitability.

DENSO Financial Statement Overview

Summary

Strong overall financial profile supported by improving multi-year profitability and low leverage. The main constraint is weaker/uneven cash flow quality, with free cash flow conversion trailing earnings and showing more volatility.

Income Statement

DENSO shows solid profitability and a clear multi-year earnings recovery. Revenue has expanded materially from FY2021 to FY2025, with operating profitability improving to ~8% in TTM (Trailing-Twelve-Months) versus ~4% in FY2021, and net margin rising to ~5%+ after a much weaker FY2021. The main watch-out is that the latest TTM net income is down versus FY2025 (annual), indicating some recent profit normalization even as revenue remains strong.

Balance Sheet

The balance sheet looks conservative for an auto supplier. Leverage is low (debt is ~0.18x equity in TTM (Trailing-Twelve-Months)), and equity is sizeable versus the asset base, supporting resilience through cycles. Returns on equity are steady in the mid-to-high single digits, though not standout, suggesting good stability but only moderate efficiency in converting capital into profits.

Cash Flow

Cash generation is positive, with TTM (Trailing-Twelve-Months) free cash flow of ~¥201B, but conversion versus earnings is mixed. Recent free cash flow is meaningfully below net income (TTM free cash flow is ~35% of net income), and operating cash flow relative to revenue is modest. Free cash flow also appears more volatile year-to-year (including a decline in FY2025 versus FY2024), which slightly reduces confidence in consistency.

Breakdown	TTM	Mar 2025	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	7.37T	7.16T	7.14T	5.52T	4.94T	5.15T
Gross Profit	1.15T	1.10T	1.09T	801.49B	661.49B	729.60B
EBITDA	958.76B	971.41B	846.45B	765.38B	561.38B	435.70B
Net Income	380.01B	419.08B	312.79B	263.90B	125.06B	68.10B
Balance Sheet
Total Assets	8.65T	8.13T	9.09T	7.43T	6.77T	5.65T
Cash, Cash Equivalents and Short-Term Investments	1.03T	986.53B	789.39B	885.54B	912.92B	718.99B
Total Debt	970.60B	699.38B	850.72B	991.43B	854.22B	465.37B
Total Liabilities	3.15T	2.94T	3.35T	2.94T	2.69T	2.09T
Stockholders Equity	5.29T	4.98T	5.53T	4.30T	3.89T	3.40T
Cash Flow
Free Cash Flow	201.18B	378.67B	515.42B	23.49B	2.55B	128.69B
Operating Cash Flow	576.95B	758.74B	961.83B	395.64B	437.24B	595.32B
Investing Cash Flow	-259.82B	121.90B	-459.49B	-301.58B	-395.90B	-447.39B
Financing Cash Flow	-357.82B	-677.43B	-496.66B	-159.54B	238.66B	-240.95B

DENSO Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2225.50
• 50DMA: Positive
• 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:6902, the sentiment is Positive. The current price of 2225.5 is above the 20-day moving average (MA) of 2177.35, above the 50-day MA of 2174.85, and above the 200-day MA of 2081.20, indicating a bullish trend. The MACD of 22.51 indicates Negative momentum. The RSI at 54.84 is Neutral, neither overbought nor oversold. The STOCH value of 45.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6902.

DENSO Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7259	77 Outperform	¥2.02T	12.14	8.34%	2.03%	4.33%	524.86%
7276	76 Outperform	$778.58B	19.29	7.20%	2.41%	-0.73%	88.36%
5802	72 Outperform	¥8.10T	31.49	8.97%	1.38%	4.96%	8.64%
6902	67 Neutral	¥6.12T	16.11	6.98%	2.98%	2.41%	11.03%
5334	67 Neutral	¥1.56T	15.31	13.69%	2.65%	6.53%	11.14%
6473	63 Neutral	¥653.54B	26.18	2.51%	3.18%	0.44%	-11.36%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

DENSO Corporate Events

DENSO Lifts Revenue Outlook but Cuts Profit Forecast on Tariffs, Costs and FX

DENSO has revised its consolidated full-year forecast for the fiscal year ending March 31, 2026, projecting higher revenue of ¥7.42 trillion but sharply lower profits compared with its previous outlook issued in October 2025. While revenue is now expected to rise 2.5% from the prior forecast, operating profit is forecast to fall 17.8%, with profit attributable to owners of the parent cut by 15.5% to ¥420 billion, reflecting the impact of U.S. tariffs, rising material costs, and updated foreign exchange assumptions of ¥155 to the dollar and ¥180 to the euro for the fourth quarter. The revision underscores margin pressure despite top-line growth and highlights DENSO’s sensitivity to global trade measures and currency fluctuations, factors that may weigh on profitability and could be closely watched by investors and industry stakeholders.

The most recent analyst rating on (JP:6902) stock is a Buy with a Yen2600.00 price target. To see the full list of analyst forecasts on DENSO stock, see the JP:6902 Stock Forecast page.

DENSO Raises Price Cap and Revises Timing for Large-Scale Share Buyback Tender Offer

DENSO Corporation has revised the pricing conditions and expected start date for its planned tender offer to repurchase its own shares, a transaction tied to acquiring the DENSO shares currently held by Toyota Industries via a proposal from Toyota Fudosan. The company will still set the self-tender offer price at a 10% discount to the lower of the prior-day closing price or one-month average on the Tokyo Stock Exchange, but has raised the cap so that, if the calculated price exceeds the closing price on January 13, 2026, the offer price will be fixed at 2,209 yen, replacing the previous ceiling of 1,935 yen set with reference to June 2, 2025. DENSO has also adjusted the expected commencement timing of the self-tender offer, originally slated for March 2026 or later, signaling increased flexibility in executing a sizable buyback of up to 184,897,656 shares from Toyota Industries’ holdings and related trust assets, a move that could reshape its shareholder base and capital structure while potentially improving capital efficiency and earnings per share.

The most recent analyst rating on (JP:6902) stock is a Hold with a Yen2200.00 price target. To see the full list of analyst forecasts on DENSO stock, see the JP:6902 Stock Forecast page.

DENSO Lifts Expected Gain as Toyota Industries Tender Offer Price Raised

DENSO has confirmed it will proceed with tendering all of its common shares in Toyota Industries Corporation into a tender offer led via a vehicle ultimately owned by Toyota Fudosan, following the formal launch of the offer. The terms have been revised from the June 2025 plan, raising the expected purchase price from 16,300 yen to 18,800 yen per share and increasing DENSO’s anticipated sale proceeds from 241.6 billion yen to 278.7 billion yen, with the tender period running from January 15 to February 12, 2026 and settlement slated for February 19, 2026. As a result of the higher offer price, DENSO now expects to book 252.4 billion yen in extraordinary gains on the sale of these investment securities in its non-consolidated results for the fiscal year ending March 31, 2026, potentially strengthening its balance sheet and financial flexibility.

The most recent analyst rating on (JP:6902) stock is a Hold with a Yen2200.00 price target. To see the full list of analyst forecasts on DENSO stock, see the JP:6902 Stock Forecast page.

DENSO Finalizes Treasury Stock Disposal for Employee Incentive Plan

DENSO CORPORATION announced the completion of its treasury stock disposal as part of an Employee Shareholding Association – Restricted Stock Incentive. The number of shares and total value were adjusted due to partial forfeiture, reflecting the number of employees who joined the incentive plan. This move is part of DENSO’s strategy to align employee interests with company performance, potentially impacting employee motivation and shareholder value.

The most recent analyst rating on (JP:6902) stock is a Buy with a Yen2700.00 price target. To see the full list of analyst forecasts on DENSO stock, see the JP:6902 Stock Forecast page.