Nippon Avionics Co., Ltd. (6946) AI Stock Analysis

• Market Cap: ¥136.09B
• Dividend Yield: 0.13%
• Average Volume (3M): 223.67K
• Price to Earnings (P/E): 36.1
• Beta (1Y): 2.00
• Revenue Growth: 28.27%
• EPS Growth: 27.15%
• Country: JP
• Employees: 657
• Sector: Industrials
• Sector Strength: 72
• Industry: Electrical Equipment & Parts
• EPS (TTM): 62.37
• Shares Outstanding: 16,764,810
• 10 Day Avg. Volume: 339,430
• 30 Day Avg. Volume: 223,666
• PEG Ratio: -3.68
• Price to Book (P/B): 2.95
• Price to Sales (P/S): 2.04
• P/FCF Ratio: 23.70
• 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): 186.6
• Revenue Forecast (FY): ¥25.00B

• Rating: 75 Outperform
• Price Target: ¥8,381.00 ▲(87.91% Upside)
• Action: Reiterated Date: 02/14/26
• Date: Action: Reiterated 02/14/26

The score is driven primarily by solid financial performance (revenue growth and stable balance sheet, tempered by cash flow and profitability volatility) and strong bullish technical momentum (price above key moving averages with positive MACD). Valuation is a modest headwind due to a high P/E, partially offset by a high dividend yield.

Positive Factors

Revenue Growth

Sustained high revenue growth indicates expanding product adoption in avionics and communications. Coupled with long-term contracts and partnerships, this growth supports reinvestment in R&D, capacity expansion and recurring revenues, providing a durable foundation for multi-quarter organic top-line momentum.

Robust Margins

Stable gross and EBIT margins reflect structural operational efficiency and pricing power in high-precision electronic components. Margin durability supports internal cash generation for capex and R&D, cushioning earnings through cycles and enabling targeted investment without relying on external financing.

Balance Sheet Strength

A strong equity base and manageable leverage provide financial flexibility to fund strategic programs, absorb industry cyclicality and support long-term contracts. This stability reduces refinancing risk, enabling continued investment in technology and supporting creditworthiness over the next several quarters.

Negative Factors

Cash Flow Volatility

Historical swings in operating and free cash flow suggest potential working-capital or collection variability tied to contract timing. Persistent volatility can strain liquidity planning and capital allocation, forcing caution on dividends, buybacks or aggressive capex until cash generation proves consistently stable.

Margin & ROE Inconsistency

Volatile net margins and uneven ROE point to sensitivity of bottom-line to one-off items, mix shifts or cost pressures. Inconsistent profitability undermines predictable shareholder returns and complicates capital allocation, making sustainable EPS growth dependent on managing margins and improving return consistency.

Customer Concentration / Government Exposure

Heavy reliance on government and defense contracts concentrates revenue and links performance to budget cycles, procurement delays and regulatory shifts. While providing stability, this exposure raises program-risk and political funding sensitivity, which can materially affect multi-quarter revenue visibility.

Nippon Avionics Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Avionics Co., Ltd. manufactures and sells micro joining equipment in Japan. The company offers resistance, laser, and seam welders; ultrasonic equipment; pulse heat unit; and high-frequency induction heaters and pulse heat fusing units, as well as joining monitors. It also offers infrared thermal imaging cameras and radiation hardened point of load DC/DC converters. The company was formerly known as Nippon Aviotronics Co., Ltd. and changed its name to Nippon Avionics Co., Ltd. in April 1980. Nippon Avionics Co., Ltd. was incorporated in 1960 and is headquartered in Yokohama, Japan.

How the Company Makes Money

Nippon Avionics generates revenue through multiple key streams, primarily by selling advanced electronic systems and components to the aerospace and defense industries. The company benefits from long-term contracts with government and military agencies, which provide a stable income base. Additionally, partnerships with major aircraft manufacturers and defense contractors contribute significantly to its earnings. The growing demand for sophisticated avionics and communication systems, along with ongoing investments in research and development, further supports the company's revenue growth as it expands its product offerings and enhances its technological capabilities.

Nippon Avionics Co., Ltd. Financial Statement Overview

Summary

Financials are solid overall: strong revenue growth and robust gross/EBIT margins support profitability, and the balance sheet shows a stable equity base with manageable leverage. Offsetting this, net profit margin and ROE have been inconsistent, and cash flows have been volatile despite recently turning free cash flow positive.

Income Statement

Nippon Avionics has demonstrated strong revenue growth over the past few years, with a notable increase from 2024 to 2025. The company maintains robust gross and EBIT margins, indicating efficient cost management and operational profitability. However, the net profit margin has experienced volatility, and despite recent improvements, the previous year's decline in net income suggests potential challenges in maintaining bottom-line growth.

Balance Sheet

The company has a solid equity base with a favorable equity ratio, reflecting financial stability. The debt-to-equity ratio is reasonable, indicating manageable leverage levels. However, the return on equity has been inconsistent, highlighting potential inefficiencies in generating shareholder returns. Despite these challenges, the balance sheet remains strong overall.

Cash Flow

Nippon Avionics has shown improvement in free cash flow, turning positive in the latest fiscal year after a period of negative cash flows. The operating cash flow to net income ratio indicates efficient cash generation relative to earnings, but past volatility in cash flows suggests potential liquidity management issues. Continued focus on cash flow stability will be crucial.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	21.07B	20.12B	18.05B	17.75B	19.23B	20.20B
Gross Profit	6.91B	6.64B	5.72B	5.74B	6.04B	5.36B
EBITDA	3.53B	3.21B	2.47B	2.17B	2.07B	1.28B
Net Income	2.16B	1.96B	2.15B	1.82B	1.63B	1.03B
Balance Sheet
Total Assets	26.94B	26.91B	27.53B	23.96B	23.06B	26.22B
Cash, Cash Equivalents and Short-Term Investments	1.12B	1.93B	2.34B	2.11B	3.05B	2.29B
Total Debt	5.79B	4.79B	4.79B	3.65B	3.87B	5.20B
Total Liabilities	12.70B	12.95B	13.22B	11.80B	12.29B	15.92B
Stockholders Equity	14.24B	13.96B	14.30B	12.17B	10.77B	10.29B
Cash Flow
Free Cash Flow	0.00	1.74B	-726.00M	-1.06B	3.08B	565.00M
Operating Cash Flow	0.00	2.15B	-206.00M	-860.00M	3.35B	859.00M
Investing Cash Flow	0.00	-471.00M	-517.00M	151.00M	-263.00M	-300.00M
Financing Cash Flow	0.00	-2.08B	956.00M	-230.00M	-2.33B	-617.00M

Nippon Avionics Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4460.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6946, the sentiment is Positive. The current price of 4460 is below the 20-day moving average (MA) of 6909.00, below the 50-day MA of 5755.20, and below the 200-day MA of 4738.87, indicating a bullish trend. The MACD of 526.96 indicates Positive momentum. The RSI at 65.31 is Neutral, neither overbought nor oversold. The STOCH value of 66.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6946.

Nippon Avionics Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6763	80 Outperform	¥27.45B	17.28	―	3.16%	12.72%	53.85%
6617	76 Outperform	¥93.79B	17.30	―	1.61%	-3.41%	13.79%
6946	75 Outperform	¥136.09B	36.11	19.52%	0.13%	28.27%	27.15%
6637	72 Outperform	¥56.22B	12.54	―	0.91%	5.28%	18.38%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6905	59 Neutral	¥56.23B	-141.15	―	5.01%	-32.74%	-117.06%
6993	46 Neutral	¥95.45B	-29.85	―	―	-2.35%	16.12%