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

• Market Cap: ¥118.66B
• Dividend Yield: 0.13%
• Average Volume (3M): 223.67K
• Price to Earnings (P/E): 17.7
• Beta (1Y): 1.76
• 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: 77 Outperform
• Price Target: ¥8,036.00 ▲(80.18% Upside)
• Action: Reiterated Date: 03/12/26
• Date: Action: Reiterated 03/12/26

The score is driven primarily by strong technical momentum (price well above all major moving averages with positive MACD and healthy RSI) and a supportive valuation profile (moderate P/E with a high dividend yield). Financial performance is solid overall, led by revenue growth and stable leverage, but tempered by net margin and cash flow volatility.

Positive Factors

Revenue Growth

Sustained ~41.7% revenue growth indicates strong demand and successful contract wins in defense, aerospace and industrial segments. Over 2–6 months this growth supports larger order backlogs, scale benefits, and improved bargaining power with suppliers and customers.

Operational Margins

Consistently robust gross and EBIT margins reflect efficient cost control and pricing power in specialized sensing and mission-critical products. This operating-level strength is durable, enabling reinvestment in R&D and cushioning profit impact from moderate cost swings.

Balance Sheet Health

A solid equity base and manageable leverage provide financial flexibility to fund R&D, absorb timing mismatches on project payments, and pursue targeted investments. This stability reduces refinancing risk and supports long-term contract performance and growth.

Negative Factors

Net Margin Volatility

Volatile net margins and a prior decline in net income suggest exposure to one-offs, pricing pressure, or cost variability. Over months this unpredictability can weaken earnings visibility, complicate capital allocation, and pressure sustained shareholder returns.

Cash Flow Stability

Although FCF recently turned positive, historical negative periods and cash-flow volatility point to inconsistent cash conversion from earnings. This can constrain funding for capex, working capital, or R&D during project cycles and increases reliance on prudent liquidity management.

Procurement Cyclicality

Revenue reliance on government and prime-contractor procurement cycles and project milestones creates structural cyclicality and lumpiness. Such dependence reduces multi-quarter revenue visibility and can amplify the impact of policy or budget shifts on order timing and cash flows.

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 makes money primarily by designing, manufacturing, and selling specialized electronic systems and components, with revenue typically generated through a mix of (1) product sales and (2) project/contract-based deliveries for specific customer requirements. Key revenue streams include: (a) defense and aerospace-related equipment supplied under procurement contracts, where revenue is recognized as systems and units are delivered and accepted; (b) industrial and commercial electronics, including infrared/thermal imaging and sensing-related products sold either as standard products or tailored configurations; and (c) engineering, customization, maintenance, and other after-sales services associated with installed systems, which can provide recurring revenue over the lifecycle of deployed equipment. Factors that influence earnings commonly include government/prime-contractor procurement cycles and budgets in defense-related businesses, customer qualification/acceptance milestones for large projects, and the company’s ability to secure repeat orders for upgrades, replacements, and service on fielded systems. Specific information on major named partnerships, customer concentration, or segment-level revenue splits is null.

Nippon Avionics Co., Ltd. Financial Statement Overview

Summary

Income statement strength (78) is supported by strong revenue growth and solid gross/EBIT margins, but net margin volatility is a risk. The balance sheet (72) shows a stable equity base and manageable leverage, though ROE inconsistency limits the score. Cash flow (65) improved with positive recent free cash flow, but prior volatility suggests liquidity/cash stability remains a key watch item.

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	3.60B	3.27B	2.47B	2.17B	2.10B	1.66B
Net Income	2.16B	1.96B	2.15B	1.82B	1.63B	1.03B
Balance Sheet
Total Assets	26.94B	27.64B	28.28B	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	13.68B	13.97B	11.79B	12.29B	15.92B
Stockholders Equity	14.24B	13.96B	14.30B	12.17B	10.77B	10.30B
Cash Flow
Free Cash Flow	0.00	1.74B	-706.00M	-1.02B	3.20B	638.00M
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: Neutral
• Last Price: 4460.00
• 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:6946, the sentiment is Neutral. The current price of 4460 is below the 20-day moving average (MA) of 7809.50, below the 50-day MA of 6696.00, and below the 200-day MA of 5056.10, indicating a neutral trend. The MACD of 301.56 indicates Positive momentum. The RSI at 45.31 is Neutral, neither overbought nor oversold. The STOCH value of 14.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
6946	77 Outperform	¥118.66B	17.71	19.52%	0.13%	28.27%	27.15%
6516	75 Outperform	¥175.15B	16.57	―	1.53%	3.37%	21.35%
6804	72 Outperform	¥139.49B	3.86	8.07%	2.64%	79.29%	35.48%
5803	72 Outperform	¥6.98T	26.86	32.32%	0.91%	27.53%	137.34%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
5801	61 Neutral	¥2.07T	7.80	10.06%	1.21%	10.52%	60.75%
6905	59 Neutral	¥49.52B	195.39	―	5.01%	-32.74%	-117.06%