Zenken Corporation (7371) AI Stock Analysis

• Market Cap: ¥8.27B
• Dividend Yield: 1.94%
• Average Volume (3M): 11.53K
• Price to Earnings (P/E): 27.4
• Beta (1Y): 0.47
• Revenue Growth: -2.79%
• EPS Growth: 17.28%
• Country: JP
• Employees: 475
• Sector: Industrials
• Sector Strength: 91
• Industry: Specialty Business Services
• EPS (TTM): 10.75
• Shares Outstanding: 12,319,600
• 10 Day Avg. Volume: 9,440
• 30 Day Avg. Volume: 11,533
• PEG Ratio: 1.46
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 0.00
• 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: ¥656.00
• Price Target Upside: -2.24% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 69 Neutral
• Price Target: ¥735.00 ▲(9.54%Upside)

The overall stock score is influenced primarily by Zenken Corporation's strong technical indicators, showing positive market momentum, despite potential overbought conditions. Financial performance highlights financial stability and strong gross margins, but declining revenues and cash flow issues are areas of concern. Valuation suggests the stock may be overvalued, dampening its attractiveness.

Zenken Corporation Business Overview & Revenue Model

Company Description

Zenken Corporation (7371) is a Japanese company primarily engaged in the information technology sector. The company specializes in offering a wide range of IT-related services, including software development, system integration, and IT consulting. It serves various industries by providing customized technology solutions to meet their specific business needs.

How the Company Makes Money

Zenken Corporation generates revenue through multiple streams, primarily by offering software development services and system integration solutions to businesses. The company earns money by developing customized software applications tailored to client requirements, which can include anything from enterprise resource planning (ERP) systems to customer relationship management (CRM) platforms. Additionally, Zenken provides IT consulting services, helping clients optimize their technology strategies to improve operational efficiency. Revenue is also generated from service contracts and long-term partnerships with clients across different industries, ensuring a steady flow of income through ongoing support and maintenance agreements.

Zenken Corporation Financial Statement Overview

Summary

Zenken Corporation demonstrates strong gross margins and a solid equity base, but faces challenges with declining revenues and cash flow generation. Although leverage is low, the modest net profit margins and ROE suggest areas for profitability improvement. The company's financial stability is strong, but improving cash flow management will be crucial for future growth and sustainability.

Income Statement

Zenken Corporation's TTM revenue shows a decline compared to previous years, indicating a negative growth trend. Gross profit margin is strong at 54.6%, reflecting efficient cost management. However, the net profit margin is modest at 4.5%, suggesting room for improvement in overall profitability. The EBIT margin stands at 5.9%, while the EBITDA margin is 8.5%, both indicating moderate operational efficiency.

Balance Sheet

The company maintains a robust equity position with an equity ratio of 84.0%, indicating financial stability. The debt-to-equity ratio is low at 5.5%, suggesting limited leverage and reduced financial risk. Return on Equity (ROE) is modest at 2.1%, showing potential for enhanced shareholder returns.

Cash Flow

Zenken's recent cash flow performance presents concerns, with operating and free cash flows at zero in the TTM report, indicating potential cash management challenges. The absence of operating cash flow to net income ratio and free cash flow to net income ratio further highlights potential cash generation issues.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	5.59B	5.63B	7.06B	7.71B	6.22B	5.83B
Gross Profit	3.09B	2.95B	3.65B	4.97B	3.75B	3.58B
EBITDA	548.74M	488.94M	800.37M	2.47B	1.42B	790.34M
Net Income	297.11M	243.54M	426.99M	1.58B	956.80M	377.22M
Balance Sheet
Total Assets	14.55B	14.29B	14.37B	15.29B	13.51B	11.57B
Cash, Cash Equivalents and Short-Term Investments	4.39B	3.61B	3.94B	6.07B	4.19B	2.23B
Total Debt	627.41M	554.05M	702.54M	951.02M	999.51M	1.19B
Total Liabilities	2.23B	2.05B	2.02B	3.14B	2.83B	2.59B
Stockholders Equity	12.32B	12.23B	12.35B	12.15B	10.68B	8.98B
Cash Flow
Free Cash Flow	0.00	645.62M	-550.59M	2.06B	1.44B	520.43M
Operating Cash Flow	0.00	682.97M	-539.12M	2.08B	1.51B	702.64M
Investing Cash Flow	0.00	-522.37M	-1.10B	-12.08M	-50.36M	-450.13M
Financing Cash Flow	0.00	-496.96M	-491.37M	-186.66M	496.13M	-147.44M

Zenken Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 671.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7371, the sentiment is Positive. The current price of 671 is above the 20-day moving average (MA) of 632.50, above the 50-day MA of 607.91, and above the 200-day MA of 551.12, indicating a bullish trend. The MACD of 15.49 indicates Negative momentum. The RSI at 70.67 is Negative, neither overbought nor oversold. The STOCH value of 61.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7371.

Zenken Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3551	80 Outperform	¥7.32B	5.49		3.47%	4.68%	55.21%
9780	78 Outperform	¥8.00B	8.81		2.88%	5.29%	12.73%
7049	71 Outperform	¥7.11B	17.56		―	7.94%	364.35%
7371	69 Neutral	¥8.27B	27.35		1.94%	-2.79%	17.28%
9791	66 Neutral	¥7.43B	7.59		2.84%	-9.65%	-25.29%
Sector *	65 Neutral	$10.85B	15.47	5.22%	1.89%	3.09%	-26.84%
3840	41 Neutral	¥8.15B	―		―	-3.89%	-11.80%