Tokyo Electron (TOELY) AI Stock Analysis

• Market Cap: $110.14B
• Dividend Yield: 1.78%
• Average Volume (3M): 12.36K
• Price to Earnings (P/E): 33.1
• Beta (1Y): 1.54
• Revenue Growth: 17.58%
• EPS Growth: 16.78%
• Country: US
• Employees: 17,702
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.88
• Shares Outstanding: 943,265,440
• 10 Day Avg. Volume: 7,736
• 30 Day Avg. Volume: 12,359
• PEG Ratio: 0.34
• Price to Book (P/B): 5.09
• Price to Sales (P/S): 3.89
• P/FCF Ratio: 22.81
• Enterprise Value/Market Cap: 160.12
• Enterprise Value/Revenue: 7.36
• Enterprise Value/Gross Profit: 16.19
• Enterprise Value/Ebitda: 24.42
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 3.81
• Revenue Forecast (FY): $15.54B

• Rating: 79 Outperform
• Price Target: $141.00 ▲(8.26% Upside)
• Action: Reiterated Date: 02/19/26
• Date: Action: Reiterated 02/19/26

The score is driven primarily by strong financial quality (high margins, strong ROE, and very low leverage) and supportive technical momentum (price above key moving averages with positive MACD). This is tempered by a relatively expensive valuation (P/E ~37) and some cyclicality/cash-conversion headwinds reflected in recent TTM growth and FCF-to-earnings conversion.

Positive Factors

High Profitability

Sustained gross and net margins indicate strong product-level economics and pricing power in equipment and services. High profitability supports R&D, field service investments and dividend/capital allocation through cycles, giving durable earnings power even if volumes fluctuate.

Very Low Leverage

An exceptionally low debt load provides financial flexibility to fund R&D, expand service networks, or withstand cyclical downturns without distress. Strong equity base and high ROE mean the company can invest or return capital while maintaining low solvency risk over the medium term.

Recurring Service Revenue

A sizable installed base and ongoing service/parts revenue create predictable, higher-margin recurring income that cushions cyclicality in new equipment sales. This installed-base economics supports long-term customer relationships and steadier cash flows across capex cycles.

Negative Factors

Cyclical Revenue Sensitivity

Core new-equipment revenue is tied to semiconductor capex cycles; recent TTM decline shows sensitivity to customers' investment timing. Even with strong margins, prolonged or deeper industry slowdowns can compress orders and visibility, pressuring medium-term top-line growth.

Suboptimal Cash Conversion

Free cash flow materially below net income signals working-capital or timing drags versus accounting earnings. This reduces immediate deployable cash for capex, buybacks or higher payouts during downturns and raises sensitivity to inventory and receivable cycles.

Customer Concentration Risk

Dependence on a handful of large IDMs, foundries and memory producers concentrates demand risk: a single major customer's capex pause or re-sourcing decision can materially shift order timing and revenue, increasing medium-term volatility despite a broad product set.

Tokyo Electron Business Overview & Revenue Model

Company Description

Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, and sells semiconductor and flat panel display (FPD) production equipment in Japan, Europe, North America, Taiwan, China, South Korea, and internationally. The company's Semiconductor Production Equipment segment offers coaters/developers, etch systems, deposition systems, and cleaning systems used in wafer processing; wafer probers used in wafer testing process; and wafer bonders/debonders. Its Flat Panel Display Production Equipment segment provides coaters/developers and etch/ash systems for use in the manufacture of FPDs, as well as inkjet printing systems for manufacturing OLED panels. The company also offers logistic, facility maintenance, and insurance services. Tokyo Electron Limited was incorporated in 1951 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Tokyo Electron primarily makes money by selling capital equipment used in semiconductor manufacturing, complemented by recurring revenue from after-sales services and support. (1) New equipment sales: The largest revenue stream typically comes from shipment and installation of wafer-fab tools (e.g., coat/develop tracks, etch systems, deposition tools, cleaning systems, thermal processing), which are purchased by integrated device manufacturers (IDMs), foundries, and memory producers as part of their fab capacity expansions and technology-node upgrades. These sales are cyclical and closely tied to customers’ capital expenditure budgets, semiconductor demand, and technology transitions. (2) Services, parts, and upgrades: Tokyo Electron earns ongoing revenue through maintenance contracts, spare parts, consumables, refurbishments, and performance/feature upgrades for its installed base. This stream is generally more recurring than new tool sales and is supported by global field service operations located near major semiconductor manufacturing hubs. (3) Display/FPD equipment and related solutions: The company also generates revenue from equipment used in flat panel display manufacturing and associated process solutions, with demand tied to display makers’ investment cycles. (4) Other contributing factors: Revenue and profitability are influenced by product mix (different tool categories carry different margins), customer concentration in large semiconductor manufacturers, and the breadth of the installed base that drives service demand. Specific customer names, partnership terms, or contract-level revenue splits are not available in this response and are therefore null.

Tokyo Electron Financial Statement Overview

Summary

Strong overall fundamentals supported by excellent profitability and an exceptionally strong, low-leverage balance sheet. The main offsets are cyclical revenue softness (TTM revenue growth -3.7%) and less-than-perfect cash-flow conversion (FCF ~57% of net income).

Income Statement

Tokyo Electron shows strong profitability with high and consistent margins (TTM (Trailing-Twelve-Months) gross margin ~45% and net margin ~21%). Earnings power remains solid with healthy EBIT and EBITDA margins around ~27%–31% in recent periods. The key weakness is growth volatility: revenue shifted from strong expansion earlier in the cycle to a modest decline in TTM (Trailing-Twelve-Months) revenue growth (-3.7%), reflecting a softer semiconductor capex environment.

Balance Sheet

The balance sheet is a major strength, highlighted by very low leverage (TTM (Trailing-Twelve-Months) debt-to-equity ~0.04; near-zero in recent annual periods) and a large equity base. Returns on equity are strong (roughly ~21%–32% historically; ~26% TTM (Trailing-Twelve-Months)), indicating efficient capital use. The main drawback is that profitability can swing with the cycle, so returns may normalize if demand weakens, but overall financial risk from debt appears minimal.

Cash Flow

Cash generation is healthy with positive operating cash flow and robust free cash flow (TTM (Trailing-Twelve-Months) free cash flow ~404B and strong TTM growth). However, cash conversion is not perfect: in TTM (Trailing-Twelve-Months), free cash flow is only ~57% of net income and operating cash flow is slightly below net income, suggesting working-capital or timing headwinds. Still, the business consistently produces meaningful free cash flow across years despite cyclicality.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	2.40T	2.43T	1.83T	2.21T	2.00T	1.40T
Gross Profit	1.09T	1.15T	830.27B	984.41B	911.82B	564.95B
EBITDA	722.18B	759.59B	508.68B	660.82B	636.20B	354.73B
Net Income	505.27B	544.13B	363.96B	471.58B	437.08B	242.94B
Balance Sheet
Total Assets	2.64T	2.63T	2.46T	2.31T	1.89T	1.43T
Cash, Cash Equivalents and Short-Term Investments	418.76B	496.24B	472.55B	473.10B	371.27B	311.55B
Total Debt	87.01B	0.00	13.32B	13.22B	4.36B	3.81B
Total Liabilities	630.19B	770.77B	696.28B	712.07B	547.41B	400.80B
Stockholders Equity	2.01T	1.86T	1.76T	1.60T	1.35T	1.02T
Cash Flow
Free Cash Flow	403.86B	414.13B	309.74B	349.96B	218.28B	84.96B
Operating Cash Flow	599.21B	582.17B	434.72B	426.27B	283.39B	145.89B
Investing Cash Flow	-165.30B	-169.61B	-125.15B	-41.76B	-55.63B	-18.27B
Financing Cash Flow	-302.78B	-388.84B	-325.01B	-256.53B	-167.26B	-114.53B

Tokyo Electron Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 130.24
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TOELY, the sentiment is Neutral. The current price of 130.24 is below the 20-day moving average (MA) of 135.46, below the 50-day MA of 131.36, and above the 200-day MA of 101.02, indicating a neutral trend. The MACD of -2.22 indicates Positive momentum. The RSI at 35.92 is Neutral, neither overbought nor oversold. The STOCH value of 12.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TOELY.

Tokyo Electron Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LRCX	80 Outperform	$264.99B	34.75	62.59%	0.56%	25.66%	46.68%
TOELY	79 Outperform	$110.14B	33.10	26.01%	1.78%	17.58%	16.78%
ASML	78 Outperform	$515.87B	36.81	52.14%	0.63%	24.91%	39.95%
MU	77 Outperform	$479.61B	12.36	22.43%	0.20%	45.43%	203.31%
AMAT	72 Outperform	$271.04B	31.26	38.90%	0.69%	4.47%	0.48%
AMD	71 Outperform	$315.31B	80.54	7.18%	―	31.83%	80.45%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%