TDSE Inc. (7046) AI Stock Analysis

• Market Cap: ¥2.88B
• Dividend Yield: 0.69%
• Average Volume (3M): 2.85K
• Price to Earnings (P/E): 20.6
• Beta (1Y): 1.09
• Revenue Growth: 12.15%
• EPS Growth: -33.34%
• Country: JP
• Employees: 145
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 38.74
• Shares Outstanding: 2,200,000
• 10 Day Avg. Volume: 3,100
• 30 Day Avg. Volume: 2,846
• PEG Ratio: -0.62
• Price to Book (P/B): 1.22
• Price to Sales (P/S): 1.00
• P/FCF Ratio: 0.00
• 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: 66 Neutral
• Price Target: ¥1,511.00 ▼(-2.26% Downside)
• Action: Reiterated Date: 01/07/26
• Date: Action: Reiterated 01/07/26

The score is primarily supported by strong financial positioning (especially the very low-debt balance sheet) and solid revenue growth, but is held back by margin compression and inconsistent free cash flow. Technicals are mixed (uptrend vs. negative MACD), and valuation looks on the expensive side with a low dividend yield.

Positive Factors

Balance sheet strength

An exceptionally conservative balance sheet with near-zero leverage provides durable financial flexibility. Low debt reduces default risk, preserves capacity for cyclical downturns, and enables funding for strategic investment or M&A without immediate external financing needs.

Sustained revenue growth

Multi-year revenue expansion indicates consistent market traction and scalable offerings. Steady top-line growth supports longer-term operating leverage potential and provides a base for reinvestment into products, sales, and customer retention to sustain competitive positioning.

Operating cash generation improved

Improving operating cash generation signals better cash conversion and operational resilience. Positive operating cash flow enhances self-funding capacity for capex or R&D, reduces reliance on external capital, and underpins sustainable operations if the trend persists.

Negative Factors

Margin compression

Material margin erosion over the last year weakens profitability durability. Lower net and operating margins erode return on capital and reduce capacity to reinvest or absorb cost inflation, suggesting structural pressure on pricing or rising operating costs.

Volatile free cash flow

A sudden drop to zero FCF after prior strong years indicates unstable cash conversion. Persistent FCF volatility undermines planning, limits capacity for buybacks/dividends, and raises questions about working-capital management or the sustainability of reported earnings.

Declining earnings (EPS)

Significant negative EPS growth despite revenue gains points to margin, cost, or non-recurring issues that weaken earnings quality. Continued EPS declines would impair returns to shareholders and constrain funding for strategic initiatives, threatening long-term profitability.

TDSE Inc. Business Overview & Revenue Model

Company Description

TDSE Inc. primarily provides consulting services on information processing and computer systems in Japan. The company offers DX and analytics consulting, SNS analysis, analysis base construction, and analysis operation and application development services; and IoT data utilization, learning utilization, and data scientist development support services. It also provides Scorobo, an artificial intelligence engine for use in finance, digital marketing, manufacture, social infrastructure, human resources, and telematics industries; and NetBase, a social listening tool for enterprise social analytics. The company was formerly known as Tecnos Data Science Engineering Incorporated and changed its name to TDSE Inc. in November 2021. TDSE Inc. was incorporated in 2013 and is based in Tokyo, Japan.

How the Company Makes Money

TDSE Inc. Financial Statement Overview

Summary

Strong multi-year revenue growth and an exceptionally conservative balance sheet (near-zero leverage) are key positives. Offsetting this are margin compression in the latest year and volatile cash conversion, including reported zero free cash flow in 2025.

Income Statement

Revenue has expanded strongly over the period (from ~¥1.38B in 2020 to ~¥2.70B in 2025), with steady growth in the last two years. Profitability remains positive but has compressed versus prior peaks: net margin declined from ~7.9% (2024) to ~5.1% (2025) and operating margin also stepped down (from ~10.8% to ~7.5%). Gross margin is still healthy for services, but the recent margin fade is the main watch item.

Balance Sheet

The balance sheet is exceptionally conservative with minimal leverage: debt is near-zero in recent years (debt-to-equity ~0.04% in 2025), a major improvement from 2020 when leverage was meaningfully higher. Equity has grown alongside the business, and returns on equity are solid (mid-to-high single digits recently), though down from the higher level seen in 2024—suggesting profitability normalization rather than balance-sheet stress.

Cash Flow

Operating cash generation is positive and improved in 2025 versus 2024, but cash conversion is inconsistent across years. Free cash flow was strong in 2022–2023, weakened sharply in 2024, and is reported at zero in 2025, which raises questions about reinvestment levels or working-capital swings. Overall, earnings quality looks mixed due to the volatility in free cash flow versus net income.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	2.75B	2.70B	2.52B	2.42B	1.72B	1.32B
Gross Profit	950.31M	925.08M	895.36M	850.92M	705.60M	469.28M
EBITDA	195.37M	224.07M	284.20M	275.75M	226.82M	288.61M
Net Income	115.43M	136.56M	200.28M	168.81M	148.33M	190.88M
Balance Sheet
Total Assets	2.65B	2.73B	2.44B	2.34B	2.05B	1.80B
Cash, Cash Equivalents and Short-Term Investments	1.83B	1.96B	1.79B	1.78B	1.61B	1.44B
Total Debt	1.00M	931.00K	2.11M	2.51M	0.00	0.00
Total Liabilities	453.00M	522.82M	365.43M	470.37M	343.24M	213.62M
Stockholders Equity	2.19B	2.21B	2.07B	1.87B	1.71B	1.59B
Cash Flow
Free Cash Flow	0.00	0.00	46.91M	192.86M	215.74M	39.62M
Operating Cash Flow	0.00	197.35M	107.18M	195.39M	224.14M	47.34M
Investing Cash Flow	0.00	-11.70M	-68.65M	-12.80M	-13.13M	1.01B
Financing Cash Flow	0.00	-22.06M	-21.67M	-20.53M	-40.76M	-520.50M

TDSE Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1546.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7046, the sentiment is Negative. The current price of 1546 is above the 20-day moving average (MA) of 1435.85, above the 50-day MA of 1482.76, and below the 200-day MA of 1550.58, indicating a bearish trend. The MACD of -31.69 indicates Positive momentum. The RSI at 42.05 is Neutral, neither overbought nor oversold. The STOCH value of 33.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:7046.

TDSE Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4421	79 Outperform	¥2.85B	12.01	―	2.86%	5.74%	5.97%
4394	75 Outperform	¥2.39B	18.68	―	2.59%	14.23%	1440.00%
7046	66 Neutral	¥2.88B	20.58	―	0.69%	12.15%	-33.34%
3970	66 Neutral	¥2.60B	-6.42	―	4.29%	15.64%	-268.60%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5618	44 Neutral	¥2.74B	-17.97	―	―	23.63%	64.65%
4427	39 Underperform	¥2.21B	-14.75	―	―	-12.77%	―