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Tokyo Electron Ltd. (JP:8035)
:8035
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Tokyo Electron
(8035)
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Rating:75Outperform
Price Target:
¥38,453.00
▲(17.23% Upside)
Tokyo Electron's strong financial performance is the primary driver of its overall stock score, supported by robust profitability and a stable balance sheet. While technical indicators show bullish momentum, the stock appears overbought, which could lead to a correction. The valuation suggests the stock might be overvalued, slightly tempering the overall score.
Positive Factors
Strong Financial Position
The company's low leverage and high return on equity underscore its financial health, positioning it well for future growth in the semiconductor industry.
Revenue Growth
Consistent revenue growth indicates expanding market reach and product adoption, vital for maintaining competitive advantage in the semiconductor industry.
Cash Generation Ability
Strong cash flow management supports operational and strategic initiatives, enhancing the company's ability to invest in R&D and future growth.
Negative Factors
Geopolitical Risks
Involvement in Chinese semiconductor manufacturing poses geopolitical risks, potentially impacting long-term business operations due to regulatory scrutiny.
Cyclical Industry Exposure
Dependence on the cyclical semiconductor industry can lead to revenue volatility, affecting long-term financial stability during downturns.
Regulatory Scrutiny
Increased regulatory scrutiny due to national security concerns could lead to restrictions, impacting Tokyo Electron's market access and growth prospects.
Tokyo Electron (8035) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
$15.94T
Dividend Yield1.73%
Average Volume (3M)5.80M
Price to Earnings (P/E)29.5
Beta (1Y)1.52
Revenue Growth16.74%
EPS Growth16.03%
CountryJP
Employees17,702
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)311.99
Shares Outstanding471,632,720
10 Day Avg. Volume5,268,610
30 Day Avg. Volume5,798,936
Financial Highlights & Ratios
PEG Ratio0.33
Price to Book (P/B)4.99
Price to Sales (P/S)3.81
P/FCF Ratio21.84
Enterprise Value/Market Cap0.55
Enterprise Value/Revenue3.52
Enterprise Value/Gross Profit7.55
Enterprise Value/Ebitda11.55
Forecast
1Y Price Target
$29,775.07Price Target Upside-9.22% Downside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Tokyo Electron Business Overview & Revenue Model
Company DescriptionTokyo Electron Limited (TEL) is a leading global supplier of semiconductor and flat panel display production equipment, headquartered in Tokyo, Japan. Established in 1963, the company operates primarily in the semiconductor equipment sector, providing advanced technologies essential for the manufacturing of integrated circuits and displays. TEL’s core products include photolithography systems, etch systems, and deposition systems, which are critical in the production processes of various electronic components. The company also offers related services and solutions that enhance manufacturing efficiency and yield.
How the Company Makes MoneyTokyo Electron generates revenue primarily through the sale of semiconductor manufacturing equipment and services, which constitute the bulk of its earnings. The company’s revenue model is heavily reliant on the cyclical nature of the semiconductor industry, where demand for equipment tends to increase in line with technological advancements and consumer electronics growth. Key revenue streams include the sale of capital equipment, maintenance and support services, and spare parts for existing equipment. Additionally, TEL benefits from strategic partnerships with leading semiconductor manufacturers, which can lead to long-term contracts and collaborations on new technologies. The company also invests in research and development to innovate and improve its product offerings, ensuring a competitive edge in the market.
Tokyo Electron Earnings Call Summary
Earnings Call Date:Oct 31, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 05, 2026
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook driven by strong financial performance, record growth projections, and advancements in AI technology. Despite challenges such as cash flow issues, China market volatility, and regulatory hurdles, the company remains confident in its strategic initiatives and technological advancements.Q3-2025 Updates
Positive Updates
Strong Financial Performance
Net sales reached ¥654.5 billion, a 15.5% increase from the previous quarter. Gross profit was ¥311.7 billion, a 19.9% increase, and operating income reached ¥199.6 billion, a 34.7% increase. Net income attributable to owners of parent was ¥157.2 billion, a 33.6% increase.
Record Growth Projections
Tokyo Electron expects fiscal 2025 full-year net sales to reach ¥2.400 trillion, representing a 31% positive growth year-over-year, outperforming market growth.
Advancements in AI and Semiconductor Technology
Significant demand for AI semiconductors is driving growth. The WFE market is expected to continue achieving record highs, with double-digit growth anticipated for 2026.
Strategic Product Development
High-value strategic products like cryogenic etching and Episode 1 wafer film deposition system are gaining traction, with increasing PORs for advanced logic and DRAM applications.
Negative Updates
Cash Flow Challenges
The third quarter saw a free cash outflow of ¥64.1 billion due to transient increase in receivables and tax payments, though improvement is expected in the fourth quarter.
China Market Volatility
Proportion of sales from China is expected to decline from over 40% to the mid-30% level next fiscal year, with expectations of a 10-20% decline in the China market for non-memory areas.
Regulatory Challenges
U.S. export controls and regulations are impacting business, though the company is closely monitoring the situation and adapting strategies accordingly.
Company Guidance
During the third quarter of the fiscal year ending March 2025, Tokyo Electron reported robust financial performance, with net sales reaching ¥654.5 billion, marking a 15.5% increase from the previous quarter. The company achieved a gross profit of ¥311.7 billion, representing a 19.9% rise, and an improved gross profit margin of 47.6%, up by 1.7 percentage points. Operating income surged by 34.7% to ¥199.6 billion, with an operating profit margin of 30.5%, up by 4.3 percentage points. Income before income taxes increased by 30.3% to ¥200.1 billion, and net income attributable to owners stood at ¥157.2 billion, a 33.6% rise. The company reported capital expenditures of ¥50.2 billion, focusing on future growth investments. The balance sheet showed total assets at ¥2,501.9 billion, with a notable decline in cash and cash equivalents by ¥230.0 billion due to dividends, share repurchase, and tax payments. Free cash outflow was reported at ¥64.1 billion, with expectations for positive figures in the fourth quarter. The ongoing strategic share repurchase program saw the acquisition of 2,024,200 shares at ¥46.9 billion, completed in January 2025.Tokyo Electron Financial Statement Overview
Summary
Tokyo Electron exhibits a strong financial position with robust profitability, efficient cash flow management, and a stable balance sheet. The company's low leverage and high return on equity further underscore its financial health, positioning it well for future growth in the semiconductor industry.Income Statement
Tokyo Electron has demonstrated strong revenue growth of 4.65% in the latest year, with impressive gross and net profit margins of 47.14% and 22.38%, respectively. The EBIT and EBITDA margins are also robust at 29.04% and 31.60%, indicating efficient operational management. These metrics highlight the company's strong profitability and growth trajectory in the semiconductor industry.92
Very Positive
Balance Sheet
The company maintains a very low debt-to-equity ratio of 0.0115, showcasing financial stability and low leverage risk. With a high return on equity of 29.33%, Tokyo Electron effectively generates profits from its equity base. The equity ratio stands at 70.65%, reflecting a solid capital structure with significant equity financing.88
Very Positive
Cash Flow
Tokyo Electron's free cash flow growth rate of 39.73% is a positive indicator of its cash-generating ability. The operating cash flow to net income ratio of 0.86 and free cash flow to net income ratio of 0.73 suggest strong cash flow management, supporting operational and strategic initiatives.85
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.49T | 2.43T | 1.83T | 2.21T | 2.00T | 1.40T |
| Gross Profit | 1.16T | 1.15T | 830.27B | 984.41B | 911.82B | 564.95B |
| EBITDA | 758.89B | 768.38B | 508.68B | 660.82B | 636.20B | 354.73B |
| Net Income | 541.86B | 544.13B | 363.96B | 471.58B | 437.08B | 242.94B |
Balance Sheet | ||||||
| Total Assets | 2.67T | 2.63T | 2.46T | 2.31T | 1.89T | 1.43T |
| Cash, Cash Equivalents and Short-Term Investments | 455.24B | 496.24B | 472.55B | 473.10B | 371.27B | 311.55B |
| Total Debt | 0.00 | 21.40B | 13.32B | 13.22B | 4.36B | 3.81B |
| Total Liabilities | 662.38B | 770.77B | 696.28B | 712.07B | 547.41B | 400.80B |
| Stockholders Equity | 2.00T | 1.86T | 1.76T | 1.60T | 1.35T | 1.02T |
Cash Flow | ||||||
| Free Cash Flow | 284.78B | 423.80B | 317.73B | 359.37B | 227.23B | 92.08B |
| Operating Cash Flow | 500.59B | 582.17B | 434.72B | 426.27B | 283.39B | 145.89B |
| Investing Cash Flow | -218.78B | -169.61B | -125.15B | -41.76B | -55.63B | -18.27B |
| Financing Cash Flow | -345.89B | -388.84B | -325.01B | -256.53B | -167.26B | -114.53B |
Tokyo Electron Technical Analysis
Positive
32800.00
Price Trends
26841.02
Positive
25731.23
Positive
24114.78
Positive
Market Momentum
1783.15
Positive
62.75
Neutral
42.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:8035, the sentiment is Positive. The current price of 32800 is above the 20-day moving average (MA) of 31280.50, above the 50-day MA of 26841.02, and above the 200-day MA of 24114.78, indicating a bullish trend. The MACD of 1783.15 indicates Positive momentum. The RSI at 62.75 is Neutral, neither overbought nor oversold. The STOCH value of 42.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:8035.
Tokyo Electron Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $15.94T | 29.46 | 27.73% | 1.73% | 16.74% | 16.03% | |
73 Outperform | ¥14.60T | 55.92 | 47.37% | 0.25% | 63.36% | 149.43% | |
73 Outperform | $5.62T | 44.49 | 25.78% | 0.77% | 13.45% | 20.37% | |
72 Outperform | $1.17T | 13.38 | 21.73% | 2.10% | 11.29% | 11.38% | |
67 Neutral | $2.77T | 29.28 | 53.12% | 1.13% | 32.51% | 57.19% | |
64 Neutral | ¥3.44T | -68.58 | -2.51% | 1.47% | -10.97% | -118.87% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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Tokyo Electron Corporate Events
Tokyo Electron Increases Interim Dividend Amid Strong Performance
Oct 31, 2025
Tokyo Electron Limited announced an increase in its interim dividend for the first half of the fiscal year ending March 31, 2026, raising it to 264 yen per share from the previously forecasted 245 yen. This decision reflects the company’s improved consolidated results and its commitment to linking dividend payments to business performance, aiming to maintain a payout ratio of around 50% based on net income attributable to owners of the parent.
The most recent analyst rating on (JP:8035) stock is a Buy with a Yen32500.00 price target. To see the full list of analyst forecasts on Tokyo Electron stock, see the JP:8035 Stock Forecast page.
Tokyo Electron Reports Q2 Financial Results with Strategic Adjustments
Oct 31, 2025
Tokyo Electron Limited reported its consolidated financial results for the second quarter ending September 30, 2025, showing a slight decline in operating and ordinary income compared to the previous year. Despite this, the company maintains a strong equity position with an increased equity ratio and has revised its dividend forecast, reflecting strategic adjustments to sustain shareholder value amidst fluctuating market conditions.
The most recent analyst rating on (JP:8035) stock is a Buy with a Yen32500.00 price target. To see the full list of analyst forecasts on Tokyo Electron stock, see the JP:8035 Stock Forecast page.
Tokyo Electron Reports Q1 2025 Earnings Amid Market Adjustments
Aug 1, 2025
Tokyo Electron Limited, a leading company in the semiconductor production equipment sector, is renowned for its innovative solutions that drive technological advancements in the semiconductor industry.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.