Nitto Denko (NDEKY) AI Stock Analysis

• Market Cap: $13.94B
• Dividend Yield: 1.48%
• Average Volume (3M): 1.71K
• Price to Earnings (P/E): 17.1
• Beta (1Y): 0.66
• Revenue Growth: 2.70%
• EPS Growth: -5.59%
• Country: US
• Employees: 25,300
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 0.36
• Shares Outstanding: 645,558,650
• 10 Day Avg. Volume: 2,129
• 30 Day Avg. Volume: 1,708
• PEG Ratio: 0.39
• Price to Book (P/B): 1.87
• Price to Sales (P/S): 1.92
• P/FCF Ratio: 17.41
• Enterprise Value/Market Cap: 134.89
• Enterprise Value/Revenue: 1.84
• Enterprise Value/Gross Profit: 4.82
• Enterprise Value/Ebitda: 7.47
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 1.26
• Revenue Forecast (FY): $6.58B

• Rating: 72 Outperform
• Price Target: $25.00 ▲(5.71% Upside)
• Action: Upgraded Date: 01/28/26
• Date: Action: Upgraded 01/28/26

The score is driven primarily by strong financial performance—high and improving margins and an exceptionally low-debt balance sheet—partly offset by weaker cash conversion. Technical indicators are currently soft (below key moving averages with negative MACD), which limits the overall score despite a reasonable valuation (P/E ~17.9, ~1.56% yield).

Positive Factors

High and improving profitability margins

Sustained high margins indicate durable pricing power from specialized materials and efficient operations. These margin levels support ongoing R&D and targeted investments, help absorb cyclical demand swings, and provide an enduring profit buffer that underpins long-term cash generation.

Exceptionally conservative balance sheet

Minimal leverage grants substantial financial flexibility to fund capex, R&D, or strategic acquisitions without refinancing risk. This conservatism lowers interest burdens and improves resilience in downturns, enabling durable capital allocation choices over multiple business cycles.

B2B engineered materials model with design‑in stickiness

A B2B model focused on qualified, application-specific materials fosters sticky customer relationships and recurring revenue once specified. R&D-driven product upgrades and value-based pricing support durable demand and premium margins across electronics, automotive, and industrial end markets.

Negative Factors

Weaker/uneven cash conversion

OCF trailing net income and FCF significantly below earnings suggest working-capital drag or elevated reinvestment needs. Over months this can constrain free cash available for dividends, buybacks, or opportunistic investments, limiting financial flexibility despite strong reported profits.

Revenue variability and cyclical exposure

Dependence on electronics and industrial end markets makes top-line lumpy and sensitive to cycle turns. Modest FY2024 decline amid otherwise positive TTM growth highlights inconsistent revenue momentum, complicating long-term planning and reducing predictability of earnings and investment returns.

Low leverage may constrain return enhancement

While a near-zero debt profile improves safety, it limits opportunities to enhance ROE through modest, strategic leverage. Absent material operational improvements, constrained capital structure flexibility could slow acceleration of shareholder returns over the medium term.

Nitto Denko Business Overview & Revenue Model

Company Description

Nitto Denko Corporation, commonly known as Nitto Denko, is a global leader in the manufacturing of advanced materials and industrial products. Founded in Japan, the company operates in several sectors, including automotive, electronics, medical, and construction. Nitto Denko is renowned for its diverse product portfolio that includes adhesive tapes, optical films, and automotive sealing materials, as well as specialty materials for semiconductor and display technologies.

How the Company Makes Money

Nitto Denko generates revenue primarily through the sale of its wide range of products across various industries. The company's revenue model is driven by several key streams, including the sale of adhesive products, electronic materials, and medical supplies. A significant portion of its earnings comes from long-term contracts and partnerships with major manufacturers in the automotive and electronics sectors, which provide stable revenue. Additionally, Nitto Denko invests in research and development to innovate and expand its product offerings, allowing it to cater to evolving market needs and maintain a competitive edge. The company's commitment to sustainability and high-quality products further enhances its market position, contributing to its overall profitability.

Nitto Denko Financial Statement Overview

Summary

Strong and improving profitability (TTM gross margin ~38%, net margin ~12.5%, operating margin ~17%, EBITDA margin ~24%) and an exceptionally conservative balance sheet (debt-to-equity ~0.003, ROE ~12%). The main offsets are revenue variability (FY2024 modest decline) and weaker/uneven cash conversion in TTM (operating cash flow below net income; FCF less than half of net income).

Income Statement

Profitability is strong and improving: TTM (Trailing-Twelve-Months) gross margin ~38% and net margin ~12.5%, up versus FY2021 levels (~32% gross, ~9% net). Operating profitability is solid (TTM operating margin ~17%, EBITDA margin ~24%). Growth is positive but not consistent—TTM revenue growth is strong, but FY2024 saw a modest revenue decline, indicating some cyclicality/volatility in top-line momentum.

Balance Sheet

Balance sheet is exceptionally conservative with minimal leverage: debt-to-equity is near zero across periods (TTM ~0.003), giving substantial financial flexibility. Equity base is large and return on equity is healthy (TTM ~12%), supporting a high-quality capital structure. The main watch item is not leverage but whether returns can be sustained/improved without meaningful balance-sheet gearing.

Cash Flow

Cash generation is good, with positive free cash flow across all periods and strong TTM free cash flow growth. However, cash conversion is somewhat uneven: TTM operating cash flow runs below net income (coverage <1.0) and free cash flow is less than half of net income in TTM, suggesting higher reinvestment needs and/or working-capital drag versus prior years where free cash flow covered a larger share of earnings.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	1.02T	1.01T	915.14B	929.04B	853.45B	761.32B
Gross Profit	390.09B	395.51B	330.86B	337.44B	302.39B	243.45B
EBITDA	251.66B	254.16B	200.84B	205.01B	183.97B	142.34B
Net Income	134.25B	137.24B	102.68B	109.17B	97.13B	70.23B
Balance Sheet
Total Assets	1.38T	1.32T	1.25T	1.15T	1.09T	965.90B
Cash, Cash Equivalents and Short-Term Investments	322.76B	363.34B	342.27B	329.97B	362.05B	302.29B
Total Debt	5.42B	455.00M	30.46B	272.00M	241.00M	545.00M
Total Liabilities	273.12B	276.80B	266.04B	250.45B	272.36B	249.22B
Stockholders Equity	1.10T	1.04T	984.02B	902.21B	821.19B	715.87B
Cash Flow
Free Cash Flow	90.87B	111.91B	87.75B	115.78B	85.53B	58.59B
Operating Cash Flow	192.92B	217.91B	155.52B	181.70B	144.49B	116.31B
Investing Cash Flow	-110.43B	-115.11B	-67.93B	-159.91B	-57.59B	-57.54B
Financing Cash Flow	-126.05B	-78.89B	-90.78B	-57.63B	-36.64B	-68.30B

Nitto Denko Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 23.65
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NDEKY, the sentiment is Negative. The current price of 23.65 is above the 20-day moving average (MA) of 22.95, above the 50-day MA of 23.20, and above the 200-day MA of 22.38, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 32.48 is Neutral, neither overbought nor oversold. The STOCH value of 20.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NDEKY.

Nitto Denko Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NDEKY	72 Outperform	$13.94B	17.06	13.21%	1.48%	2.70%	-5.59%
RPM	71 Outperform	$13.95B	21.09	22.72%	1.96%	3.09%	12.25%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
LYB	60 Neutral	$18.75B	-18.77	-7.03%	12.78%	-19.65%	-157.13%
IFF	57 Neutral	$20.22B	-46.13	-2.48%	2.41%	-3.01%	82.30%
ALB	55 Neutral	$19.84B	-32.60	-5.24%	1.10%	-23.92%	90.47%
WLK	55 Neutral	$13.16B	-6.32	-15.54%	2.88%	-5.32%	-1108.29%