SCSK Corporation (9719) AI Stock Analysis

• Market Cap: ¥1.77T
• Dividend Yield: 1.48%
• Average Volume (3M): 893.82K
• Price to Earnings (P/E): 27.1
• Beta (1Y): 0.75
• Revenue Growth: 42.98%
• EPS Growth: 48.88%
• Country: JP
• Employees: 16,296
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 46.89
• Shares Outstanding: 313,125,270
• 10 Day Avg. Volume: 769,110
• 30 Day Avg. Volume: 893,820
• PEG Ratio: 2.27
• Price to Book (P/B): 3.96
• Price to Sales (P/S): 1.93
• P/FCF Ratio: 19.88
• 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: 69 Neutral
• Price Target: ¥6,236.00 ▲(10.24% Upside)

SCSK Corporation's stock score is primarily driven by strong financial performance, with robust revenue growth and profitability. However, technical indicators suggest the stock is currently overbought, and valuation metrics indicate potential overvaluation. Investors should monitor leverage and cash flow trends closely.

Positive Factors

High Return on Equity & Margins

SCSK's elevated ROE and stable operating margins indicate efficient capital deployment and disciplined cost control across its services mix. These durable profitability metrics support reinvestment, cover capital needs, and underpin long-term shareholder returns even amid business-cycle variability.

Strong Free Cash Flow Generation

SCSK produces material and growing free cash flow that tracks earnings (~0.86x net income), demonstrating earnings quality. Durable cash generation supports reinvestment in cloud/managed services, selective M&A or debt reduction, and cushions the business against temporary revenue volatility.

Recurring Services and Revenue Momentum

Recent revenue acceleration, driven by system integration, managed operations and cloud services, reflects structural demand for recurring IT services. A services-heavy mix yields higher retention and predictable revenue streams, improving long-term visibility compared with pure project-only models.

Negative Factors

Elevated Leverage

Materially higher leverage reduces balance-sheet flexibility and raises interest and refinancing risk. With debt recently stepped up, the company is more sensitive to funding conditions, which can constrain strategic investments, limit downside protection, and amplify earnings volatility in stress scenarios.

Weak Cash Conversion

Low operating cash flow coverage implies timing or working-capital pressure (receivables, contract billing patterns). Persistently weak cash conversion can strain liquidity, complicate debt servicing given higher leverage, and force reliance on external funding for growth or capex.

Uneven Historical Revenue Growth

SCSK's revenue profile has been lumpy, reflecting project-driven system integration work. This unevenness reduces long-term visibility for capacity planning and margins, making forecasting and resource allocation harder and increasing execution risk when scaling recurring offerings.

SCSK Corporation Business Overview & Revenue Model

Company Description

SCSK Corporation provides information technology (IT) services in Japan and internationally. The company's Manufacturing & Telecommunication Systems Business segment offers IT solutions comprising core systems, manufacturing and information management systems, supply chain management (SCM), and customer relationship management (CRM) systems for manufacturing, communication, and energy industries. Its Distribution & Media Systems Business segment offers IT solutions, such as core and information systems, SCM, CRM, and e-commerce systems for distribution, service, and media industries. The company's Global System Solutions & Innovation Business segment provides IT solutions for trading companies. Its Financial IT Business segment develops, maintains, and operates systems for banks and trust banks, as well as insurance, securities, lease, and credit companies. The company's IT Business Solutions segment provides contact center services; and application management outsourcing services that covers development, installation, maintenance, and operation of enterprise resource planning and CRM products, such as ProActive, SAP, Oracle, and Salesforce, as well as business process outsourcing services. Its IT Platform Solutions segment provides services and products in the fields of IT infrastructure and manufacturing, including computer-aided design and engineering. The company's IT Management Service segment develops solutions-oriented netXDC data centers to provide outsourcing services; and provides cloud infrastructure, on-site SE support management services. Its Mobility System segment offers software development and assessments, middleware, and process improvement measures for automobile electronic control units. The company was formerly known as Sumisho Computer Systems Corporation and changed its name to SCSK Corporation in October 2011. The company was incorporated in 1969 and is headquartered in Tokyo, Japan. SCSK Corporation is a subsidiary of Sumitomo Corporation.

How the Company Makes Money

SCSK generates revenue primarily through its IT services and solutions, which encompass system integration, software development, and IT consulting. The company's revenue model is driven by project-based contracts, ongoing maintenance agreements, and subscription services for cloud solutions. Key revenue streams include fees for custom software development, licensing of proprietary software products, and managed services. Additionally, SCSK has established significant partnerships with leading technology firms, enabling it to offer integrated solutions that further enhance its market competitiveness and contribute to its earnings.

SCSK Corporation Financial Statement Overview

Summary

SCSK Corporation shows strong financial performance with impressive revenue growth and profitability metrics. The balance sheet reflects a strategic use of leverage, though with potential risks due to a high debt-to-equity ratio. Cash flow generation is solid, but recent declines in free cash flow growth warrant attention.

Income Statement

SCSK Corporation demonstrates strong revenue growth with a TTM increase of 9.96%, indicating robust demand for its services. The gross profit margin of 27.18% and net profit margin of 7.56% reflect solid profitability, although slightly lower than industry leaders. EBIT and EBITDA margins are healthy at 11.45% and 15.71%, respectively, showcasing efficient operational management.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 1.32, suggesting a balanced approach to leveraging. Return on equity is strong at 16.32%, indicating effective use of shareholder funds. However, the equity ratio of 35.89% suggests a reliance on debt financing, which could pose risks in volatile markets.

Cash Flow

Operating cash flow to net income ratio stands at 1.39, reflecting good cash generation relative to earnings. However, the free cash flow growth rate has declined by 2.51% in the TTM, indicating potential challenges in maintaining cash reserves. The free cash flow to net income ratio of 0.89 suggests efficient conversion of profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	774.32B	596.07B	480.31B	445.91B	414.15B	396.85B
Gross Profit	211.23B	159.48B	121.91B	117.68B	108.19B	102.97B
EBITDA	132.57B	91.74B	80.45B	73.57B	67.47B	65.47B
Net Income	65.52B	45.04B	40.46B	37.30B	33.47B	33.44B
Balance Sheet
Total Assets	850.75B	885.03B	471.40B	435.47B	407.61B	380.40B
Cash, Cash Equivalents and Short-Term Investments	106.60B	105.62B	149.37B	121.62B	122.33B	108.99B
Total Debt	398.76B	315.41B	73.97B	77.92B	78.97B	85.64B
Total Liabilities	532.35B	592.46B	168.49B	163.07B	160.25B	153.06B
Stockholders Equity	317.00B	291.42B	302.25B	271.91B	246.92B	226.87B
Cash Flow
Free Cash Flow	77.56B	58.00B	58.31B	29.28B	45.00B	32.95B
Operating Cash Flow	90.68B	68.04B	67.90B	43.59B	59.08B	50.22B
Investing Cash Flow	-7.70B	-275.49B	-19.90B	-14.95B	-14.93B	-20.59B
Financing Cash Flow	-65.42B	167.95B	-25.88B	-29.07B	-32.34B	-32.49B

SCSK Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5657.00
• 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:9719, the sentiment is Positive. The current price of 5657 is below the 20-day moving average (MA) of 5671.10, below the 50-day MA of 5670.82, and above the 200-day MA of 4785.63, indicating a bullish trend. The MACD of 8.60 indicates Positive momentum. The RSI at 62.48 is Neutral, neither overbought nor oversold. The STOCH value of 73.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:9719.

SCSK Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2317	76 Outperform	¥168.51B	14.89	―	2.30%	13.82%	37.07%
3626	73 Outperform	¥865.21B	15.91	―	1.39%	4.95%	9.54%
9719	69 Neutral	¥1.77T	27.06	―	1.48%	42.98%	48.88%
9682	66 Neutral	¥191.86B	16.90	18.89%	2.78%	11.90%	60.66%
8056	66 Neutral	¥427.35B	14.38	―	2.17%	10.42%	28.75%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2327	57 Neutral	¥725.02B	26.11	10.07%	1.76%	11.66%	-0.21%