Mitsubishi Pencil Company, Limited (7976) AI Stock Analysis

• Market Cap: ¥120.85B
• Dividend Yield: 2.09%
• Average Volume (3M): 77.10K
• Price to Earnings (P/E): 20.4
• Beta (1Y): 0.79
• Revenue Growth: 6.39%
• EPS Growth: -34.84%
• Country: JP
• Employees: 2,800
• Sector: Industrials
• Sector Strength: 72
• Industry: Business Equipment & Supplies
• EPS (TTM): 41.30
• Shares Outstanding: 60,042,590
• 10 Day Avg. Volume: 74,810
• 30 Day Avg. Volume: 77,100
• PEG Ratio: -0.43
• Price to Book (P/B): 0.86
• Price to Sales (P/S): 1.32
• P/FCF Ratio: -33.74
• 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): 158.3
• Revenue Forecast (FY): ¥95.22B

• Rating: 71 Outperform
• Price Target: ¥2,517.00 ▲(15.62% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by solid financial strength (notably a strong, low-leverage balance sheet and multi-year revenue growth), tempered by a meaningful deterioration in free cash flow and softer earnings in 2025. Technicals are neutral-to-mixed and valuation appears fair with a moderate dividend yield.

Positive Factors

Multi-year revenue growth

Sustained revenue growth across 2021–2025 signals durable demand for core writing instruments and stationery. Persistent top-line expansion supports scale economies, distribution leverage and investment in product lines and overseas expansion, underpinning medium-term growth prospects.

Conservative balance sheet

Very low historical leverage and steadily rising equity give the company financial flexibility to fund operations, invest in product development and weather demand shocks. This conservative structure reduces refinancing risk and supports capital allocation over the next several quarters.

Healthy historical margins

Sustained gross and net margins reflect pricing power from strong brands and profitable product mix (premium pens, consumables). Durable margin structure supports return on capital and reinvestment capacity, assuming brand and refill-driven repeat purchases persist.

Negative Factors

Negative free cash flow

A shift to negative free cash flow in 2025 indicates weakening cash conversion and higher reinvestment or working-capital strain. Persistently negative FCF would limit ability to fund growth organically, pay dividends or reduce debt without drawing on reserves or external financing.

Profitability deterioration

Meaningful declines in net income and operating profitability in 2025 erode cushion from historic margins. If cost pressures or mix shifts persist, returns on equity and cash generation could remain impaired, constraining strategic investments and shareholder returns over the medium term.

Jump in total debt

An increase in total debt in 2025, even from a low base, raises leverage sensitivity precisely when cash flow weakened. Higher indebtedness increases interest and refinancing risk, reducing flexibility to respond to market changes and potentially pressuring credit metrics if trends persist.

Mitsubishi Pencil Company, Limited Business Overview & Revenue Model

Company Description

Mitsubishi Pencil Co., Ltd. manufactures and supplies writing instruments in Japan. The company's products include pencils and colored pencils, water-based ink roller balls, oil-based ballpoint pens, mechanical pencils and refill lead, felt-tip pens and markers, and school supplies. Mitsubishi Pencil Co., Ltd. was founded in 1887 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Mitsubishi Pencil generates revenue through the sale of its diverse product lineup, which includes writing instruments, markers, and stationery items. The company employs a multi-faceted revenue model that includes direct sales through retail channels, online platforms, and partnerships with distributors. Key revenue streams are driven by both domestic and international sales, with a significant presence in markets outside Japan. Additionally, Mitsubishi Pencil engages in strategic partnerships and collaborations with educational institutions and corporations to promote its products, further enhancing its market reach and driving sales growth.

Mitsubishi Pencil Company, Limited Financial Statement Overview

Summary

Strong multi-year revenue growth and a very conservative balance sheet (low leverage, steadily rising equity) support the score. However, profitability cooled in 2025 (lower net income and EBIT/EBITDA) and cash generation weakened materially, with free cash flow turning negative in 2025.

Income Statement

Revenue shows a strong multi-year uptrend (2021–2025), with solid growth through 2024, but profitability has cooled recently: net income fell meaningfully in 2025 versus 2024, and EBIT/EBITDA also declined. Margins were healthy in 2022–2024 (gross margin ~49–53% and net margin ~10–14% where provided), indicating good underlying pricing/brand strength, but the latest year signals some pressure on earnings despite higher sales.

Balance Sheet

The balance sheet is conservatively positioned with low leverage: debt-to-equity remained very modest in 2020–2024 (~0.03–0.09). Equity steadily expanded over the period, supporting asset growth, and returns on equity were consistently solid in 2022–2024 (~6.7–8.9%). A watch item is the jump in total debt in 2025 versus prior years, though leverage still appears manageable given the large equity base.

Cash Flow

Cash generation has become more volatile. Operating cash flow and free cash flow were strong in 2022–2023 and remained positive in 2024, but free cash flow dropped sharply in 2024 versus 2023 and turned negative in 2025. Cash conversion was excellent in 2023 (free cash flow covered most of net income) but weakened in 2024, suggesting higher reinvestment needs and/or working-capital drag; the 2025 negative free cash flow is the key near-term risk signal.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	89.63B	89.81B	88.82B	74.80B	69.00B	61.89B
Gross Profit	47.38B	43.41B	46.84B	38.45B	33.95B	30.67B
EBITDA	16.31B	15.15B	16.64B	17.02B	13.10B	10.80B
Net Income	7.74B	6.24B	11.27B	10.17B	6.95B	5.66B
Balance Sheet
Total Assets	170.45B	183.00B	176.88B	145.47B	130.80B	123.79B
Cash, Cash Equivalents and Short-Term Investments	34.09B	37.07B	41.35B	57.91B	48.07B	44.93B
Total Debt	10.76B	14.90B	11.62B	3.38B	4.09B	4.81B
Total Liabilities	39.33B	42.57B	46.17B	28.99B	25.80B	26.12B
Stockholders Equity	128.64B	138.53B	128.36B	114.29B	103.09B	95.88B
Cash Flow
Free Cash Flow	0.00	-3.52B	2.51B	9.91B	5.70B	4.40B
Operating Cash Flow	0.00	2.41B	6.47B	11.76B	7.28B	8.37B
Investing Cash Flow	0.00	-7.92B	-27.91B	-71.00M	-1.65B	-3.94B
Financing Cash Flow	0.00	-1.87B	4.11B	-3.72B	-3.90B	-2.75B

Mitsubishi Pencil Company, Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2177.00
• 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:7976, the sentiment is Positive. The current price of 2177 is below the 20-day moving average (MA) of 2330.55, below the 50-day MA of 2269.59, and above the 200-day MA of 2122.34, indicating a bullish trend. The MACD of 13.45 indicates Positive momentum. The RSI at 53.80 is Neutral, neither overbought nor oversold. The STOCH value of 68.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7976.

Mitsubishi Pencil Company, Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7976	71 Outperform	¥120.85B	20.42	―	2.09%	6.39%	-34.84%
7846	71 Outperform	¥191.55B	15.68	―	2.56%	-0.26%	3.35%
7975	70 Neutral	¥4.52B	21.64	―	2.03%	3.24%	―
7984	67 Neutral	¥386.11B	18.63	8.83%	2.33%	6.29%	8.74%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
7962	58 Neutral	¥23.41B	43.82	―	1.69%	-2.71%	―
7992	42 Neutral	¥3.38B	-15.24	―	―	4.11%	33.06%

Mitsubishi Pencil Company, Limited Corporate Events

Mitsubishi Pencil Introduces Share-Based Remuneration Plan

Mitsubishi Pencil Company, Limited has announced the introduction of a share-based remuneration plan for its management-level employees. This initiative aims to enhance employee engagement and increase the company’s medium- to long-term corporate value by aligning management interests with stock performance. The plan involves establishing a trust to acquire company shares, which will be distributed to eligible employees, encouraging them to focus on the company’s stock price growth and corporate value enhancement.

The most recent analyst rating on (JP:7976) stock is a Buy with a Yen2373.00 price target. To see the full list of analyst forecasts on Mitsubishi Pencil Company, Limited stock, see the JP:7976 Stock Forecast page.