Sotetsu Holdings, Inc. (9003) AI Stock Analysis

• Market Cap: ¥249.65B
• Dividend Yield: 2.47%
• Average Volume (3M): 387.41K
• Price to Earnings (P/E): 12.4
• Beta (1Y): 0.35
• Revenue Growth: -1.88%
• EPS Growth: -9.94%
• Country: JP
• Employees: 5,075
• Sector: Industrials
• Sector Strength: 72
• Industry: Conglomerates
• EPS (TTM): 56.52
• Shares Outstanding: 98,145,490
• 10 Day Avg. Volume: 230,080
• 30 Day Avg. Volume: 387,410
• PEG Ratio: 0.24
• Price to Book (P/B): 1.18
• Price to Sales (P/S): 0.73
• P/FCF Ratio: -28.42
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: ¥2,973.00 ▲(6.20% Upside)

Sotetsu Holdings is well-positioned with strong revenue growth and operational improvements, supported by positive technical indicators. While the valuation is reasonable, the high leverage and cash flow volatility require careful management to sustain long-term growth.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability and shareholder value.

Operational Performance

Improved gross profit margins suggest better cost control and operational efficiency, which can lead to sustained profitability and competitive advantage.

Cash Generation

Strong cash generation supports ongoing operations and investments, providing a buffer against financial volatility and enabling strategic growth initiatives.

Negative Factors

High Leverage

High leverage increases financial risk and can limit flexibility in downturns, necessitating careful debt management to ensure long-term sustainability.

Free Cash Flow Volatility

Volatile free cash flow can strain liquidity and impact the ability to fund new projects or return capital to shareholders, requiring strategic cash management.

Net Profit Margin

A lower net profit margin compared to peers may indicate inefficiencies or higher costs, potentially affecting competitiveness and long-term profitability.

Sotetsu Holdings, Inc. Business Overview & Revenue Model

Company Description

Sotetsu Holdings, Inc. (9003) is a Japanese conglomerate primarily engaged in the transportation sector, particularly through its rail and bus operations. The company operates commuter trains in the Kanagawa Prefecture and offers various transportation services, including bus services and taxi operations. Beyond transportation, Sotetsu Holdings also has interests in real estate, retail, and leisure facilities, which complement its core business and contribute to its overall growth.

How the Company Makes Money

Sotetsu Holdings generates revenue primarily through its transportation services, including ticket sales from its rail and bus operations. The company benefits from a stable commuter base and integrates various services to enhance customer experience, such as providing convenient transfers and connections. Additionally, Sotetsu Holdings earns revenue from real estate developments, including commercial and residential properties, which are often strategically located near its transport hubs. The retail and leisure segments also contribute to its earnings through the operation of shopping centers and entertainment facilities. Strategic partnerships with local governments and businesses further enhance its revenue potential by driving regional development and increasing ridership.

Sotetsu Holdings, Inc. Financial Statement Overview

Summary

Sotetsu Holdings shows solid revenue growth and improved operational performance, with enhanced gross profit margins. However, high leverage and fluctuating free cash flow present financial risks that need strategic management.

Income Statement

Sotetsu Holdings has shown consistent revenue growth over the years, with an impressive increase from 216,684 million yen in 2022 to 292,178 million yen in 2025. The gross profit margin has improved, reflecting enhanced cost management and efficiency. EBIT and EBITDA margins have also shown positive trends, indicating better operational performance. However, the net profit margin, while improved, still suggests room for further enhancement in profitability.

Balance Sheet

The company's debt-to-equity ratio is relatively high, indicating significant leverage, which could pose financial risk if not managed carefully. However, the return on equity has shown improvement, which is a positive signal for shareholders. The equity ratio suggests a moderate level of financial stability, but the company should focus on reducing its debt burden to strengthen its balance sheet further.

Cash Flow

While operating cash flow has been strong, the company has experienced volatility in free cash flow, mainly due to substantial capital expenditures. The operating cash flow to net income ratio is healthy, indicating good cash generation relative to reported earnings. However, the negative free cash flow to net income ratio in recent years highlights the impact of large capital investments, suggesting a need for cautious cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	286.26B	292.18B	270.04B	249.67B	216.68B	221.14B
Gross Profit	105.97B	108.52B	94.58B	73.83B	56.13B	51.89B
EBITDA	55.45B	58.58B	51.79B	37.03B	28.16B	11.85B
Net Income	19.23B	22.41B	16.08B	6.98B	1.85B	-13.06B
Balance Sheet
Total Assets	749.05B	757.26B	715.38B	646.95B	623.41B	619.41B
Cash, Cash Equivalents and Short-Term Investments	28.78B	31.58B	27.55B	20.16B	22.04B	23.68B
Total Debt	436.67B	432.92B	416.87B	373.32B	366.88B	358.88B
Total Liabilities	567.40B	575.18B	550.65B	501.16B	483.71B	480.10B
Stockholders Equity	181.56B	181.99B	164.65B	145.69B	139.63B	139.23B
Cash Flow
Free Cash Flow	0.00	-7.54B	-36.22B	4.39B	-23.32B	-42.58B
Operating Cash Flow	0.00	36.68B	20.55B	36.35B	23.75B	11.84B
Investing Cash Flow	0.00	-43.78B	-58.04B	-33.57B	-29.42B	-24.75B
Financing Cash Flow	0.00	5.24B	34.92B	-4.92B	3.89B	12.53B

Sotetsu Holdings, Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2799.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:9003, the sentiment is Positive. The current price of 2799.5 is above the 20-day moving average (MA) of 2631.30, above the 50-day MA of 2626.28, and above the 200-day MA of 2366.16, indicating a bullish trend. The MACD of 36.76 indicates Negative momentum. The RSI at 65.52 is Neutral, neither overbought nor oversold. The STOCH value of 90.85 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:9003.

Sotetsu Holdings, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9003	72 Outperform	¥249.65B	12.38	―	2.47%	-1.88%	-9.94%
9008	72 Outperform	¥461.84B	12.34	9.06%	2.79%	6.97%	8.61%
9045	68 Neutral	¥336.74B	12.01	8.87%	1.26%	-8.30%	14.55%
9048	66 Neutral	¥329.48B	9.68	―	2.28%	6.13%	-23.73%
9041	64 Neutral	¥567.32B	11.67	8.64%	1.89%	3.90%	5.62%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
9010	60 Neutral	¥135.30B	27.55	―	1.39%	4.80%	30.05%

Sotetsu Holdings, Inc. Corporate Events

Sotetsu Holdings Announces Subsidiary Merger to Boost Hotel Operations

Sotetsu Holdings, Inc. announced a merger of its wholly owned subsidiaries, Sotetsu Hotel Management, Sotetsu Inn, and Sunroute, effective February 1, 2026. This strategic move aims to consolidate management resources, eliminate redundant operations, and enhance efficiency in the accommodation-only hotel business, positioning Sotetsu Hotel Management as the surviving entity.

Sotetsu Holdings Reports Decline in Q1 2025 Financial Results

Sotetsu Holdings, Inc. reported a decline in its financial performance for the three months ended June 30, 2025, with operating revenues down by 7.3% and a significant drop in profits compared to the previous year. Despite the decrease, the company maintains its dividend forecast for the fiscal year ending March 31, 2026, indicating a stable outlook for shareholders.