Mitsubishi Pencil Company, Limited (7976) AI Stock Analysis

• Market Cap: ¥118.63B
• Dividend Yield: 2.09%
• Average Volume (3M): 77.10K
• Price to Earnings (P/E): 16.5
• Beta (1Y): 0.85
• Revenue Growth: 6.39%
• EPS Growth: -34.84%
• Country: JP
• Employees: 2,800
• Sector: Industrials
• Sector Strength: 72
• Industry: Business Equipment & Supplies
• EPS (TTM): 15.69
• Shares Outstanding: 60,042,590
• 10 Day Avg. Volume: 74,810
• 30 Day Avg. Volume: 77,100
• PEG Ratio: 1.16
• Price to Book (P/B): 0.99
• Price to Sales (P/S): 1.43
• P/FCF Ratio: 50.46
• 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: 74 Outperform
• Price Target: ¥2,565.00 ▲(17.82% Upside)

Mitsubishi Pencil's strong financial performance is the most significant factor, driven by robust revenue growth and profitability margins. The technical analysis indicates a bearish trend, which slightly offsets the positive financial outlook. The valuation is reasonable, with a fair P/E ratio and a decent dividend yield, supporting the overall score.

Positive Factors

Margin Sustainability

Consistently high gross and operating margins indicate durable pricing power and efficient production for core writing instruments. Strong margins create long-term cash generation capacity, funding R&D, marketing and channel support while cushioning the business against input cost swings.

Balance Sheet Strength

A conservative capital structure and high equity ratio provide financial flexibility to invest in product development and international expansion, withstand downturns, and pursue opportunistic M&A without levering materially. Low leverage supports steady long-term credit resilience.

Recurring Consumables & Distribution

A consumables-heavy model (refills, leads) plus diversified retail, e‑commerce and B2B channels generates repeat revenue and stable customer lifetime value. This recurring demand reduces revenue volatility and supports predictable cash flows over the medium term.

Negative Factors

Free Cash Flow Decline

A steep, persistent drop in free cash flow constrains the company's ability to fund capex, buybacks or dividend increases without tapping reserves or raising debt. If not reversed, weaker FCF limits strategic flexibility and investment in growth initiatives over months.

Earnings Per Share Weakness

A large decline in EPS points to pressure on profitability per share, which can reflect margin compression or non‑recurring charges. Sustained EPS deterioration undermines reinvestment capacity and makes funding dividends or strategic projects harder over the medium term.

Product‑Mix Sensitivity

Reliance on a shifting mix between premium and mass-market items makes revenues and margins sensitive to consumer preferences and economic cycles. A durable downturn or shift toward lower‑priced products would structurally depress margins and revenue growth if not offset by new offerings.

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

Mitsubishi Pencil demonstrates strong financial health with impressive revenue growth and profitability margins. The balance sheet is robust with low leverage, and the company efficiently utilizes its equity. Despite a decline in free cash flow, the company maintains positive cash flow ratios, suggesting operational resilience. Overall, the financial statements reflect a company well-positioned for sustained growth, although improvements in cash flow management could further enhance financial performance.

Income Statement

Mitsubishi Pencil has demonstrated strong revenue growth with a significant increase from 2023 to 2024, resulting in a revenue growth rate of 18.74%. The gross profit margin has improved to 52.74%, and the net profit margin is robust at 12.69%. The EBIT and EBITDA margins are also healthy at 13.73% and 18.73%, respectively, indicating effective cost management and operational efficiency. These metrics underscore the company's profitability and growth momentum.

Balance Sheet

The balance sheet shows a solid equity base with an equity ratio of 72.58%, reflecting financial stability. The company maintains a low debt-to-equity ratio of 0.09, indicating conservative leverage. Return on Equity (ROE) is strong at 8.78%, highlighting efficient use of equity to generate profits. Overall, the balance sheet reflects a stable financial position with low leverage and good equity utilization.

Cash Flow

The company's free cash flow has decreased from 2023 to 2024, resulting in a negative growth rate of -74.68%, which is a concern. However, the operating cash flow to net income ratio remains positive at 0.57, indicating that the company generates sufficient cash from operations to cover its net income. The free cash flow to net income ratio is lower at 0.22, suggesting that while cash generation is adequate, there is room for improvement in managing capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	89.63B	88.82B	74.80B	69.00B	61.89B	55.18B
Gross Profit	47.38B	46.84B	38.45B	33.95B	30.67B	27.31B
EBITDA	16.31B	16.64B	17.02B	13.10B	10.80B	8.30B
Net Income	7.74B	11.27B	10.17B	6.95B	5.66B	3.79B
Balance Sheet
Total Assets	170.45B	176.88B	145.47B	130.80B	123.79B	114.88B
Cash, Cash Equivalents and Short-Term Investments	34.09B	41.35B	57.91B	48.07B	44.93B	42.78B
Total Debt	10.76B	11.62B	3.38B	4.09B	4.81B	5.55B
Total Liabilities	39.33B	46.17B	28.99B	25.80B	26.12B	23.03B
Stockholders Equity	128.64B	128.36B	114.29B	103.09B	95.88B	90.07B
Cash Flow
Free Cash Flow	0.00	2.51B	9.91B	5.70B	4.40B	261.00M
Operating Cash Flow	0.00	6.47B	11.76B	7.28B	8.37B	4.74B
Investing Cash Flow	0.00	-27.91B	-71.00M	-1.65B	-3.94B	-4.55B
Financing Cash Flow	0.00	4.11B	-3.72B	-3.90B	-2.75B	-3.91B

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 2263.00, below the 50-day MA of 2184.31, and above the 200-day MA of 2119.60, indicating a bullish trend. The MACD of 30.53 indicates Positive momentum. The RSI at 57.29 is Neutral, neither overbought nor oversold. The STOCH value of 37.11 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
7984	76 Outperform	¥388.21B	18.40	8.83%	2.33%	6.29%	8.74%
7846	75 Outperform	¥187.12B	13.63	―	2.56%	-0.26%	3.35%
7976	74 Outperform	¥118.63B	16.50	―	2.09%	6.39%	-34.84%
7975	70 Neutral	¥4.29B	20.52	―	2.03%	3.24%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
7962	58 Neutral	¥23.12B	43.29	―	1.69%	-2.71%	―
7992	51 Neutral	¥3.38B	-3.19	―	―	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.