NEC Corp

NEC Corp maintains a conservative capital structure with a debt-to-equity ratio of 0.22 and a current ratio of 1.57, indicating strong short-term liquidity coverage. The balance sheet shows total assets of JPY 4.47 trillion against total liabilities of JPY 2.27 trillion, with total equity standing at JPY 2.20 trillion. Long-term debt is limited to JPY 489.2 billion, while cash and equivalents total JPY 658.3 billion, providing a net cash position that supports financial flexibility. The company generates robust operating cash flow of JPY 438.5 billion and free cash flow of JPY 338.5 billion, demonstrating strong cash conversion capabilities relative to its revenue base.

Profitability metrics indicate solid returns, with a return on equity (ROE) of 12.3% and a return on assets (ROA) of 6.05%. The company trades at a price-to-earnings ratio of 21.34 and a price-to-book ratio of 2.62, reflecting market confidence in its earnings power and asset base. The enterprise value-to-EBITDA multiple stands at 15.73, while the EV-to-revenue ratio is 1.56. These valuation multiples suggest the market prices in stable growth and profitability, consistent with a mature software and IT services provider.

Revenue concentration and segment details are not explicitly provided in the available data, but the company’s activity is defined as Application Software within the IT Services industry. The geographic exposure is not detailed in the current snapshot, limiting specific regional risk assessment. However, the classification as a Software & IT Services firm implies a diversified client base typical of enterprise software providers.

Growth trajectory analysis is constrained by the absence of historical period data in the input. The latest normalized period shows revenue of JPY 3.58 trillion and net income of JPY 270.2 billion. Without multi-year historical data, year-over-year growth rates cannot be calculated, but the current scale of operations suggests a large-cap enterprise with established market presence.

Risk assessment indicates low liquidity risk and low dilution risk, with no immediate filing-based flags detected. The company’s strong cash position and low leverage mitigate financial distress risks. The absence of significant debt and the presence of substantial cash reserves provide a buffer against economic downturns or sector-specific headwinds.

Recent events and analyst sentiment are positive, with a mean price target of JPY 6,171.43 and a median target of JPY 6,350.00, implying significant upside from the current market price of JPY 4,347. The mean recommendation is 1.73, with 4 strong buys and 11 buys, and no holds, indicating strong analyst confidence in the company’s future performance. Competitor context includes Microsoft, Salesforce, and ServiceNow, positioning NEC within the global enterprise software landscape.

Net income surged 54.3% year-over-year to JPY 270.2 billion in FY2026, demonstrating strong bottom-line growth momentum.

Operating income expanded 40.3% to JPY 359.9 billion in FY2026, indicating significant improvement in core operational profitability.

Analysts project 64.6% upside potential, with a mean price target of JPY 6,171 versus the current market price of JPY 3,750.

Free cash flow increased 48.7% to JPY 296.2 billion in FY2026, reflecting robust cash generation capabilities for the period.

Revenue grew at a 4.4% CAGR over four years, reaching JPY 3.58 trillion in FY2026, showing consistent top-line expansion.

The company faces high credit risk, signaling potential vulnerabilities in its financial stability or counterparty exposure according to risk assessments.

Net margin of -0.85% and ROE of -0.3% remain significantly below the IT Services cohort medians of 3.88% and 4.27%.

Cash conversion ratio of -17.78% places the company in the bottom quartile of its cohort, indicating poor cash generation efficiency.

Long-term debt increased to JPY 666.4 billion in FY2025, rising from JPY 548.6 billion in FY2024, suggesting higher leverage pressure.

The company carries a medium liquidity risk flag, which may constrain its ability to meet short-term financial obligations efficiently.