Canon Inc. (7751) AI Stock Analysis

• Market Cap: ¥4.57T
• Dividend Yield: 3.27%
• Average Volume (3M): 2.84M
• Price to Earnings (P/E): 13.0
• Beta (1Y): 0.67
• Revenue Growth: 4.02%
• EPS Growth: -41.52%
• Country: JP
• Employees: 111,733
• Sector: Technology
• Sector Strength: 88
• Industry: Computer Hardware
• EPS (TTM): 126.49
• Shares Outstanding: 1,333,763,400
• 10 Day Avg. Volume: 2,997,670
• 30 Day Avg. Volume: 2,837,936
• PEG Ratio: 0.10
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 0.91
• P/FCF Ratio: 19.59
• 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: ¥4,500.00
• Price Target Upside: -4.98% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 385.27
• Revenue Forecast (FY): ¥4.73T

• Rating: 69 Neutral
• Price Target: ¥5,130.00 ▲(8.32% Upside)
• Action: Downgraded Date: 01/31/26
• Date: Action: Downgraded 01/31/26

The score is primarily supported by solid financial performance (steady growth and stronger operating profit) and attractive valuation (moderate P/E and strong dividend). This is tempered by increased 2025 leverage and weaker/volatile free cash flow, plus mixed technical momentum (uptrend but negative MACD and weak stochastic).

Positive Factors

Recurring revenue from consumables and services

Canon’s business model generates durable recurring sales from consumables, service contracts and maintenance tied to a large installed hardware base. This creates predictable revenue streams, higher lifetime customer value and resilience versus pure transactional hardware cycles over the medium term.

Large equity base and historically conservative leverage

A substantial equity base and historically low debt-to-equity provided financial flexibility, supporting investment, R&D and cyclicality. Even with a recent step-up in debt, the strong capital base helps absorb shocks and funds strategic initiatives without immediate pressure on operations or liquidity.

Steady revenue growth and improving operating profit

Consistent top-line growth and materially stronger operating profit indicate improving core operating performance. Persistent operating improvement supports sustainable cash generation and the ability to reinvest in products and services, strengthening long-term competitiveness across segments.

Negative Factors

Step-up in total debt in 2025

The notable increase in total debt raises leverage risk compared with prior years, reducing financial flexibility. If elevated debt persists, it could constrain capital allocation choices, increase interest exposure and limit the company's ability to respond to industry downturns or fund strategic investments.

Volatile free cash flow and recent meaningful decline

Widely fluctuating free cash flow and a 24% drop in 2025 reflect working-capital and capex swings that undermine cash-conversion predictability. Persistent volatility in FCF can hinder consistent funding for dividends, buybacks or growth investments and raises sensitivity to operational shocks.

Uneven earnings quality and thin net margins

Relatively thin net margins and uneven bottom-line performance highlight margin vulnerability in hardware-led segments. This structural modest profitability increases sensitivity to pricing, component costs and capital-cycle swings in industrial segments, challenging sustainable earnings growth over time.

Canon Inc. Business Overview & Revenue Model

Company Description

Canon Inc., together with its subsidiaries, manufactures and sells office multifunction devices (MFDs), plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Printing Business Unit, Imaging Business Unit, Medical Business Unit, and Industrial and Others Business Unit. The Printing Business Unit segment offers office MFDs, document solutions, laser multifunction printers, laser printers, inkjet printers, image scanners, calculators, digital continuous feed presses, digital sheet-fed presses, and large format printers. The Imaging Business Unit segment provides interchangeable-lens digital cameras, digital compact cameras, interchangeable lenses, compact photo printers, network cameras, video management and video content analytics software, digital camcorders, digital cinema cameras, broadcast equipment, and multimedia projectors. The Medical System Business Unit segment offers computed tomography systems, diagnostic ultrasound systems, diagnostic X-ray systems, magnetic resonance imaging systems, clinical chemistry analyzers, digital radiography systems, and ophthalmic equipment. The Industry and Others Business Unit segment provides semiconductor lithography equipment, flat panel display lithography equipment, vacuum thin-film deposition equipment, organic light-emitting diode display manufacturing equipment, die bonders, handy terminals, and document scanners. The company also provides maintenance services; and supplies replacement drums, parts, toners, and papers. It sells its products under the Canon brand through subsidiaries or independent distributors to dealers and retail outlets, as well as directly to end-users globally. Canon Inc. was founded in 1933 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Canon generates revenue primarily through the sale of imaging and printing products, which include digital cameras, camcorders, and printers. The company has established multiple revenue streams: first, from the sale of hardware such as cameras and printers; second, from consumables like ink and paper used in printing; and third, from service and maintenance contracts associated with its office equipment. Additionally, Canon has a growing presence in the medical equipment sector, providing imaging solutions for healthcare. Strategic partnerships with businesses and organizations in various sectors enhance its market reach and bolster sales. Canon also invests in research and development to innovate and improve its product offerings, which helps maintain its competitive edge and revenue growth.

Canon Inc. Financial Statement Overview

Summary

Steady revenue growth and improved operating profit support the score, backed by a strong equity base. Offsetting factors include a notable rise in debt in 2025 and volatile free cash flow with a meaningful decline in 2025, raising cash-conversion and leverage monitoring needs.

Income Statement

Revenue has grown steadily from 2021–2025, with 2025 annual revenue up modestly (~5% vs. 2024). Profitability is solid on an operating basis (2025 EBIT and EBITDA materially higher than 2024), but earnings quality is somewhat uneven: net income jumped sharply in 2025 vs. 2024, while margins in 2024 were relatively thin (net margin ~3.5%). Overall, the company shows improving operating performance, but bottom-line consistency and margin stability are the key watch items.

Balance Sheet

The balance sheet looks generally stable with a large equity base (2025 equity ~¥3.49T vs. assets ~¥6.14T). Leverage was conservative in 2021–2024 (debt-to-equity ~0.11–0.20), supporting financial flexibility; however, total debt rose notably in 2025 (to ~¥1.03T from ~¥0.66T in 2024), implying a step-up in leverage risk versus prior years. Returns on equity were mid-single to high-single digits in 2021–2024, indicating decent but not exceptional capital efficiency.

Cash Flow

Cash generation is positive, with operating cash flow consistently meaningful (2025 ~¥476B). However, free cash flow has been volatile: strong improvement in 2023–2024 followed by a sizeable decline in 2025 (free cash flow down ~24% year over year). In 2023–2024, free cash flow covered a meaningful portion of net income (about ~49% to ~61%), but the variability suggests working-capital/capex swings that can pressure cash conversion in weaker periods.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.62T	4.51T	4.18T	4.03T	3.51T
Gross Profit	2.16T	2.14T	1.97T	1.83T	1.63T
EBITDA	728.60B	540.37B	631.71B	579.98B	524.60B
Net Income	332.05B	160.03B	264.51B	243.96B	214.72B
Balance Sheet
Total Assets	6.14T	5.77T	5.42T	5.10T	4.75T
Cash, Cash Equivalents and Short-Term Investments	618.43B	506.34B	405.14B	373.01B	404.77B
Total Debt	1.03T	663.50B	517.32B	417.41B	320.97B
Total Liabilities	2.36T	2.12T	1.81T	1.75T	1.65T
Stockholders Equity	3.49T	3.38T	3.35T	3.11T	2.87T
Cash Flow
Free Cash Flow	213.74B	369.83B	220.88B	74.08B	273.68B
Operating Cash Flow	475.90B	606.83B	451.19B	262.60B	451.03B
Investing Cash Flow	-237.45B	-297.32B	-275.37B	-180.82B	-207.26B
Financing Cash Flow	-179.22B	-226.00B	-156.73B	-146.84B	-267.37B

Canon Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4736.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7751, the sentiment is Positive. The current price of 4736 is below the 20-day moving average (MA) of 4797.30, above the 50-day MA of 4717.33, and above the 200-day MA of 4390.04, indicating a neutral trend. The MACD of 0.66 indicates Positive momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 53.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7751.

Canon Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7739	76 Outperform	¥148.33B	22.80	―	1.92%	7.46%	-8.01%
6727	72 Outperform	¥113.52B	16.19	17.33%	4.06%	-8.93%	48.98%
7751	69 Neutral	¥4.57T	12.97	―	3.27%	4.02%	-41.52%
6737	69 Neutral	¥93.75B	18.89	―	4.76%	1.81%	9.07%
6724	67 Neutral	¥677.58B	15.69	6.07%	3.69%	0.48%	6.92%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6588	55 Neutral	¥177.76B	-28.23	-6.22%	1.61%	-4.91%	-136.94%