TDSE Inc. (7046) AI Stock Analysis

• Market Cap: ¥2.80B
• Dividend Yield: 0.69%
• Average Volume (3M): 2.85K
• Price to Earnings (P/E): 8.9
• Beta (1Y): 1.02
• 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: 13.71
• 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: ¥1,470.00 ▼(-4.92% 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

Very low leverage / conservative balance sheet

Near-zero debt materially lowers financial risk and preserves flexibility to fund growth, make strategic investments, or weather downturns without refinancing pressure. Over the next 2–6 months this balance-sheet strength supports durable capital allocation and resilience to cyclical shocks.

Multi-year revenue growth

Sustained top-line expansion signals product-market fit and expanding customer traction, giving management room to invest in scale and product improvements. This steady revenue base reduces execution risk and underpins medium-term planning and capacity investments over the next several quarters.

Healthy service gross margins and solid ROE

A resilient gross margin profile and mid-to-high single-digit ROE indicate an economically viable services model with ability to generate returns on equity. Over months this supports reinvestment, modest shareholder distributions, and demonstrates structural profitability versus low-margin peers.

Negative Factors

Margin compression

Declining operating and net margins reduce the firm's ability to convert revenue into sustainable profits, signalling cost or pricing pressure. If structural, this weakens cash generation and ROI, requiring margin recovery initiatives to restore durable profitability over the coming quarters.

Volatile and weak free cash flow

Inconsistent cash conversion and a reported zero FCF in 2025 undermine the company's ability to self-fund growth, capex, or shareholder returns. This volatility increases funding and execution risk and complicates multi-quarter planning and sustainable investment decisions.

Earnings volatility / EPS contraction

Material EPS decline reflects profit pressure and potential one-offs or margin deterioration, making earnings less predictable. Persistent EPS weakness limits retained-earnings growth and can constrain long-term investments and confidence in medium-term earnings stability.

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

null

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	950.98M	922.51M	892.61M	848.75M	703.80M	468.00M
EBITDA	195.15M	221.64M	284.20M	275.75M	226.82M	61.91M
Net Income	116.21M	136.56M	200.28M	168.81M	148.33M	190.88M
Balance Sheet
Total Assets	2.65B	2.73B	2.44B	2.34B	2.05B	1.81B
Cash, Cash Equivalents and Short-Term Investments	1.84B	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	451.49M	522.82M	366.51M	472.33M	346.07M	217.34M
Stockholders Equity	2.19B	2.21B	2.07B	1.87B	1.71B	1.59B
Cash Flow
Free Cash Flow	0.00	197.35M	107.18M	192.86M	215.74M	47.34M
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: Negative
• 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 1363.15, above the 50-day MA of 1452.88, and below the 200-day MA of 1552.19, indicating a bearish trend. The MACD of -23.34 indicates Negative momentum. The RSI at 45.89 is Neutral, neither overbought nor oversold. The STOCH value of 78.48 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	¥2.84B	22.68	―	2.86%	5.74%	5.97%
3839	76 Outperform	¥5.26B	-16.02	―	1.61%	7.03%	1.01%
3670	67 Neutral	¥2.47B	7.72	―	2.76%	-9.03%	53.70%
7046	66 Neutral	¥2.80B	8.94	―	0.69%	12.15%	-33.34%
4736	66 Neutral	¥3.08B	30.93	―	1.54%	7.59%	16.93%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4416	57 Neutral	¥2.50B	268.52	―	―	5.05%	-50.80%