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Tokyo Electron Ltd (TOELY)
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Tokyo Electron (TOELY) AI Stock Analysis

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TOELY

Tokyo Electron

(OTC:TOELY)

Rating:68Neutral
Price Target:
Tokyo Electron's strong financial health and robust balance sheet are significant strengths, supporting a solid overall score. The technical analysis presents mixed signals, with bearish trends and overbought conditions potentially limiting upside. Valuation appears reasonable with a decent dividend yield, but recent revenue and free cash flow declines pose challenges.

Tokyo Electron (TOELY) vs. SPDR S&P 500 ETF (SPY)

Tokyo Electron Business Overview & Revenue Model

Company DescriptionTokyo Electron Limited (TOELY) is a leading global company in the semiconductor production equipment (SPE) and flat panel display (FPD) industries. Headquartered in Tokyo, Japan, the company specializes in the development, manufacturing, and sale of cutting-edge equipment used in the production of semiconductors and electronic components. Its core products include etching systems, deposition systems, cleaning systems, and coater/developer systems, which are essential for fabricating integrated circuits and display panels.
How the Company Makes MoneyTokyo Electron generates revenue primarily through the sale of its semiconductor and flat panel display manufacturing equipment. Its key revenue streams include the sale of new equipment, maintenance services, and spare parts. The company also benefits from long-term partnerships and alliances with major semiconductor manufacturers and technology firms, which ensure a steady demand for its products. Tokyo Electron's earnings are further supported by its investment in research and development, enabling the company to continually innovate and maintain its competitive edge in advanced manufacturing technologies. Additionally, the company's global reach and strategic positioning in key markets contribute to its revenue growth and stability.

Tokyo Electron Earnings Call Summary

Earnings Call Date:Jul 31, 2025
(Q4-2025)
|
% Change Since: |
Next Earnings Date:Nov 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant financial achievements, with record-breaking revenue and growth in key segments like DRAM and HBM. However, challenges such as quarterly declines in profit margins, decreased sales in China, and potential impacts from new tariffs were noted. Despite these lowlights, the positive outlook for fiscal 2026 suggests continued growth.
Q4-2025 Updates
Positive Updates
Record-Breaking Financial Performance
Net sales reached ¥2,431.5 billion, a 32.8% increase year-over-year. Operating income was ¥697.3 billion, a 52.8% increase, and net income was ¥544.1 billion, a 49.5% increase year-over-year. Gross profit exceeded ¥1 trillion for the first time with a margin of 47.1%.
Strong DRAM and HBM Growth
Sales to DRAM customers increased by 59% year-over-year, driven by demand for advanced technologies such as HBM. The company also increased its market share in DRAM.
Expansion in Etch Systems Market
The company increased its market share in etch systems by 6 percentage points year-over-year, driven by winning 100% mass-production PORs for critical processes.
Successful Share Repurchase
Conducted a share repurchase of about ¥150 billion in total, benefiting shareholders.
Positive Outlook for Fiscal 2026
Net sales for fiscal 2026 are expected to increase by 6.9% to ¥2,600 billion, with record high net sales and operating income anticipated.
Negative Updates
Quarterly Decline in Key Metrics
In the fourth quarter, gross profit declined by 0.4% and net income decreased by 9.1% from the previous quarter, with operating profit margin dropping by 2.5 percentage points.
Decreased Sales in China
Sales to China declined by 8.4 percentage points from the previous quarter to 34.3%, due to shipment timing and reduced capital investment by emerging customers.
Challenges in Profit Margins
Operating profit margin decreased by 3.8 percentage points year-over-year, impacted by increased R&D expenses and SG&A costs.
Potential Impact of Tariffs
Concerns about the impact of newly announced tariffs by the U.S. government on customer investment attitudes, particularly in China.
Company Guidance
During the call, Tokyo Electron provided comprehensive guidance for the fiscal year ended March 2025, outlining significant financial achievements and future expectations. The company reported net sales of ¥2,431.5 billion, a 32.8% increase year-over-year, with gross profit surpassing ¥1 trillion for the first time at ¥1,146.2 billion, resulting in a gross profit margin of 47.1%. Operating income reached ¥697.3 billion, reflecting a 52.8% increase, while net income attributable to owners was ¥544.1 billion, up by 49.5%. The return on equity (ROE) was 30.3%. Tokyo Electron also highlighted their robust R&D and capital expenditures, with R&D expenses totaling ¥250.0 billion, a 23.2% increase, and capital expenditures amounting to ¥162.1 billion. Looking ahead, the company anticipates net sales of ¥2,600 billion for fiscal 2026, representing a 6.9% growth, with plans to invest ¥300 billion in R&D. The guidance also touched on the company's strategic focus areas, including advanced logic for AI servers, HBM, and emerging technologies such as cryogenic etching and wafer bonding, aiming to capitalize on the expected growth in the WFE market driven by AI-related investments.

Tokyo Electron Financial Statement Overview

Summary
Tokyo Electron demonstrates strong financial health with high profitability margins and solid cash flow management. The company benefits from a robust equity position, low leverage, and effective cost control. However, the recent decline in revenue and free cash flow growth could pose challenges if trends continue.
Income Statement
75
Positive
Tokyo Electron shows strong profitability with a healthy gross profit margin of approximately 45.36% in 2024. However, revenue growth has been negative, with a decline of about 17.14% from 2023 to 2024. Despite this, the company maintains a robust net profit margin of 19.88%, indicating efficient cost management. The EBIT margin remains solid at 24.92%, albeit slightly lower than the previous year due to reduced revenue, reflecting strong operational efficiency.
Balance Sheet
80
Positive
The balance sheet of Tokyo Electron is strong with a low debt-to-equity ratio of 0.0076, indicating minimal leverage. The company has a high equity ratio of 71.68%, showing strong solvency and asset financing through equity. Return on equity is impressive at 20.68%, suggesting effective use of shareholder funds to generate profits. The company's financial position is stable with solid equity backing and low financial risk.
Cash Flow
70
Positive
Tokyo Electron's cash flow is positive, with operating cash flow exceeding net income, resulting in a healthy operating cash flow to net income ratio of 1.19. However, there's a decline in free cash flow by around 11.49% from 2023 to 2024, which could impact future investments. Despite this, the company maintains a commendable free cash flow to net income ratio of 0.85, suggesting effective cash management.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue2.43T1.83T2.21T2.00T1.40T
Gross Profit1.15T830.27B984.41B911.82B564.95B
EBITDA759.59B508.68B660.82B636.20B354.73B
Net Income544.13B363.96B471.58B437.08B242.94B
Balance Sheet
Total Assets2.63T2.46T2.31T1.89T1.43T
Cash, Cash Equivalents and Short-Term Investments496.24B472.55B473.10B371.27B311.55B
Total Debt0.0013.32B13.22B4.36B3.81B
Total Liabilities770.77B696.28B712.07B547.41B400.80B
Stockholders Equity1.86T1.76T1.60T1.35T1.02T
Cash Flow
Free Cash Flow414.13B309.74B349.96B218.28B84.96B
Operating Cash Flow582.17B434.72B426.27B283.39B145.89B
Investing Cash Flow-169.61B-125.15B-41.76B-55.63B-18.27B
Financing Cash Flow-388.84B-325.01B-256.53B-167.26B-114.53B

Tokyo Electron Technical Analysis

Technical Analysis Sentiment
Negative
Last Price68.62
Price Trends
50DMA
84.23
Negative
100DMA
79.86
Negative
200DMA
78.96
Negative
Market Momentum
MACD
-4.74
Positive
RSI
27.02
Positive
STOCH
2.31
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TOELY, the sentiment is Negative. The current price of 68.62 is below the 20-day moving average (MA) of 73.94, below the 50-day MA of 84.23, and below the 200-day MA of 78.96, indicating a bearish trend. The MACD of -4.74 indicates Positive momentum. The RSI at 27.02 is Positive, neither overbought nor oversold. The STOCH value of 2.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TOELY.

Tokyo Electron Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$291.87B28.9056.14%0.89%27.09%40.94%
80
Outperform
$128.18B24.1058.24%0.89%23.68%43.16%
80
Outperform
$130.29B21.2413.11%0.39%58.22%
77
Outperform
$270.40B95.914.70%27.17%108.67%
69
Neutral
$131.06B19.3135.64%1.05%6.70%-5.95%
68
Neutral
$63.55B17.5929.80%1.75%21.38%26.62%
61
Neutral
$35.62B8.22-10.94%1.88%8.86%-10.36%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TOELY
Tokyo Electron
68.62
-21.99
-24.27%
AMD
Advanced Micro Devices
166.62
20.26
13.84%
AMAT
Applied Materials
164.51
-26.39
-13.82%
ASML
ASML Holding
763.20
-117.36
-13.33%
LRCX
Lam Research
103.63
24.05
30.22%
MU
Micron
116.50
22.08
23.38%
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.Date of analysis: Apr 29, 2025