Nihon Enterprise Co., Ltd

Nihon Enterprise maintains a strong liquidity position, with cash and equivalents amounting to ¥4.42 billion, significantly exceeding its total liabilities of ¥1.03 billion, resulting in a current ratio of 8.05. The company's price-to-book ratio of 0.89 and price-to-tangible-book ratio of 0.89 suggest that the market values the company at a discount to its book value, which may reflect cautious investor sentiment or undervaluation.

Profitability metrics indicate a modest return on equity (ROE) of 1.00% and a return on assets (ROA) of 0.82%, both below the typical thresholds for high-performing IT services firms. The company's operating income of ¥68.17 million and net income of ¥49.03 million suggest limited profitability relative to its revenue of ¥12.51 billion. These figures highlight the need for operational efficiency improvements to align with industry benchmarks.

Geographically and segment-wise, the company's exposure is not explicitly detailed in the available data. However, the absence of disclosed revenue concentration by region or business segment implies a potentially diversified revenue base, which could mitigate risks associated with regional or sector-specific downturns.

The company's growth trajectory appears subdued, with no significant revenue or earnings growth indicated in the latest financials. The price-to-earnings ratio of 88.81 suggests that the market is pricing in low near-term earnings growth expectations, which is consistent with the company's current profitability levels. Analyst estimates for revenue and EPS align closely with reported figures, indicating a stable but not growing business model.

Risk factors for Nihon Enterprise are currently low, with no immediate liquidity or dilution concerns identified. The company's debt-to-equity ratio of 0.04 and low long-term debt of ¥182.66 million indicate a conservative capital structure, reducing financial risk exposure. However, the company's low ROE and ROA suggest that management may need to explore new avenues for value creation to improve shareholder returns.

Recent filings and transcripts do not highlight any material events or strategic shifts. The company's operating cash flow of ¥272.04 million and capital expenditure of -¥85.98 million (representing a net cash inflow) suggest a focus on maintaining liquidity rather than aggressive expansion. This conservative approach may limit growth potential but supports financial stability.

Operating and net margins exceed IT services cohort medians, indicating superior profitability relative to peers.

Cash conversion ratio of 5.55 ranks best-in-class among 783 IT services peers, highlighting efficiency.

Debt-to-equity ratio of 0.04 is significantly lower than the cohort median of 0.12, ensuring financial stability.

Low dilution, liquidity, and credit risk flags suggest a stable operational environment with minimal immediate threats.

Revenue maintained a positive 0.5% CAGR over four years, demonstrating resilience despite recent volatility.

Free cash flow turned negative at -94.2 million JPY in FY2025, reversing previous positive generation trends.

Return on equity of 1.0% falls well below the IT services cohort median of 4.27%.

Revenue declined 5.4% year-over-year in FY2025, marking the first annual drop in the provided period.

Revenue ¥1.14B, +2,6% YoY; Operating income −41,3% YoY.

• ▍Revenue ¥1.14B, +2,6% YoY
• ▍Operating income −41,3% YoY
• ▍Net income −50,3% YoY
• ▍Net margin 0.4%

Revenue ¥1.11B, +2,1% YoY; Operating income +124,2% YoY.

• ▍Revenue ¥1.11B, +2,1% YoY
• ▍Operating income +124,2% YoY
• ▍Net income +430,5% YoY
• ▍Net margin 1.0%

Revenue ¥1.08B, +1,2% YoY; Operating income −780,2% YoY.

• ▍Revenue ¥1.08B, +1,2% YoY
• ▍Operating income −780,2% YoY
• ▍Net income +24,3% YoY
• ▍Net margin -0.7%

Revenue ¥1.18B, −5,8% YoY; Operating income −52,6% YoY.

• ▍Revenue ¥1.18B, −5,8% YoY
• ▍Operating income −52,6% YoY
• ▍Net income −56,3% YoY
• ▍Net margin 1.8%

Revenue ¥1.11B; Operating income ¥23.0M.

• ▍Revenue ¥1.11B
• ▍Operating income ¥23.0M
• ▍Net margin 0.8%

Revenue ¥1.08B; Operating income ¥10.8M.

• ▍Revenue ¥1.08B
• ▍Operating income ¥10.8M
• ▍Net margin 0.2%

Revenue ¥1.07B; Operating income ¥1.7M.

• ▍Revenue ¥1.07B
• ▍Operating income ¥1.7M
• ▍Net margin -1.0%

Revenue ¥1.25B; Operating income ¥68.2M.

• ▍Revenue ¥1.25B
• ▍Operating income ¥68.2M
• ▍Net margin 3.9%

Revenue ¥4.44B, −5,4% YoY; Operating income −74,3% YoY.

• ▍Revenue ¥4.44B, −5,4% YoY
• ▍Operating income −74,3% YoY
• ▍Net income −89,6% YoY
• ▍Free cash flow −155,5% YoY
• ▍Net margin 0.5%

Revenue ¥4.70B, +11,6% YoY; Operating income +46,5% YoY.

• ▍Revenue ¥4.70B, +11,6% YoY
• ▍Operating income +46,5% YoY
• ▍Net income +102,8% YoY
• ▍Free cash flow +69,0% YoY
• ▍Net margin 4.5%

Revenue ¥4.21B, +4,7% YoY; Operating income +75,2% YoY.

• ▍Revenue ¥4.21B, +4,7% YoY
• ▍Operating income +75,2% YoY
• ▍Net income +44,0% YoY
• ▍Free cash flow +9 174,0% YoY
• ▍Net margin 2.5%

Revenue ¥4.02B, −7,5% YoY; Operating income −58,9% YoY.

• ▍Revenue ¥4.02B, −7,5% YoY
• ▍Operating income −58,9% YoY
• ▍Net income −46,8% YoY
• ▍Free cash flow −99,0% YoY
• ▍Net margin 1.8%