TDSE Inc. (7046) AI Stock Analysis

• Market Cap: ¥3.09B
• Dividend Yield: 0.69%
• Average Volume (3M): 2.85K
• Price to Earnings (P/E): 22.1
• Beta (1Y): 1.15
• 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: ¥1,620.00 ▲(4.79% Upside)

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

Conservative balance sheet

Exceptionally low leverage provides durable financial flexibility and resilience. Near-zero debt reduces refinancing and interest-rate risk, enabling management to fund growth, absorb cyclical shocks, and prioritize strategic investments without jeopardizing the capital structure.

Sustained revenue growth

Multi-year top-line expansion signals durable demand and successful market penetration in IT services. Consistent revenue growth supports scale economies, long-term client relationships, and a larger base for margin recovery if cost control and pricing stabilize.

Healthy service-level gross margins

Maintained gross margins in a services business reflect structural pricing power and efficient delivery. Healthy gross margin enables operating leverage, funding for R&D or hiring, and a buffer against external cost pressures if management holds SG&A steady.

Negative Factors

Margin compression

Declining margins reduce sustainable profitability and cash available for reinvestment or shareholder returns. If driven by structural cost increases or pricing pressure, margin erosion can persist, lowering returns on capital and limiting strategic flexibility over the medium term.

Inconsistent free cash flow

Volatile cash conversion undermines earnings quality and planning. Zero FCF in 2025 constrains organic funding for capex, M&A, or dividends and increases reliance on operational improvements or external financing to sustain growth initiatives over the coming years.

Mixed earnings quality

Discrepancies between reported net income and cash generation suggest timing, working-capital swings, or one-offs affecting reported profits. Persisting earnings-quality issues make forecasting and performance assessment harder and may mask underlying structural profitability trends.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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: Positive

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 below the 20-day moving average (MA) of 1572.00, above the 50-day MA of 1534.34, and above the 200-day MA of 1531.76, indicating a bearish trend. The MACD of -4.57 indicates Positive momentum. The RSI at 45.19 is Neutral, neither overbought nor oversold. The STOCH value of 18.24 is Positive, 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	¥2.94B	10.89	―	2.86%	5.74%	5.97%
4394	75 Outperform	¥2.36B	18.49	―	2.59%	14.23%	1440.00%
7046	66 Neutral	¥3.09B	22.06	―	0.69%	12.15%	-33.34%
3970	66 Neutral	¥2.56B	-11.15	―	4.29%	15.64%	-268.60%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5618	46 Neutral	¥2.65B	-9.17	―	―	23.63%	64.65%
4427	39 Underperform	¥2.65B	161.36	―	―	-12.77%	―