FRONTEO, Inc. (2158) AI Stock Analysis

• Market Cap: ¥35.82B
• Dividend Yield: N/A
• Average Volume (3M): 2.73M
• Price to Earnings (P/E): 136.4
• Beta (1Y): 1.83
• Revenue Growth: -18.95%
• EPS Growth: N/A
• Country: JP
• Employees: 225
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): -4.28
• Shares Outstanding: 39,357,860
• 10 Day Avg. Volume: 2,269,260
• 30 Day Avg. Volume: 2,732,823
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥1,094.00
• Price Target Upside: 17.51% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 60 Neutral
• Price Target: ¥1,094.00 ▲(17.51% Upside)

The overall stock score is driven by mixed financial performance and technical indicators suggesting overbought conditions. The stock appears overvalued given its high P/E ratio, and lack of earnings call data and corporate events add uncertainty. Stabilizing financial metrics and addressing valuation concerns will be key to improving the stock's attractiveness.

FRONTEO, Inc. Business Overview & Revenue Model

Company Description

FRONTEO, Inc. (2158) is a Japanese technology company specializing in data analysis and artificial intelligence solutions. The company offers a range of services, including legal technology, healthcare, and business intelligence, leveraging its proprietary AI engines to provide insights and support decision-making processes. FRONTEO focuses on sectors such as legal and compliance, life sciences, and corporate digital transformation, aiming to enhance operational efficiency and strategic outcomes for its clients.

How the Company Makes Money

FRONTEO, Inc. generates revenue primarily through its AI-driven solutions and services tailored for various industries. The company earns money by providing legal analytics and e-discovery services to law firms and corporate legal departments, healthcare data analysis for medical institutions and pharmaceutical companies, and business intelligence solutions to enhance enterprise operations. Revenue streams include service fees for bespoke AI solutions, subscription models for ongoing analytics services, and consulting fees for strategic insights and implementation support. The company may also benefit from partnerships with technology firms and industry-specific organizations to expand its reach and enhance its product offerings.

FRONTEO, Inc. Financial Statement Overview

Summary

FRONTEO, Inc. exhibits a mixed financial performance. Signs of operational recovery and improved leverage are positive, but challenges remain with erratic revenue and profit margins, and inconsistent cash flow. Stabilizing cash flows and enhancing profitability are crucial for future growth and stability.

Income Statement

The company's income statement shows a volatile performance over recent years. The gross profit margin has been consistently positive, indicating good cost management relative to revenue. However, there is a significant fluctuation in net profit margin, with recent losses in 2023 and 2024 following profitable years. Revenue growth has also been erratic, with a decline in 2025. Despite this, recent improvements in EBIT and EBITDA margins suggest a recovery in operational efficiency.

Balance Sheet

The balance sheet reflects a moderate financial position. The debt-to-equity ratio has improved, indicating better leverage management. Return on equity is turning positive again, showing potential for increasing shareholder value. However, a relatively low equity ratio could indicate risk if financial conditions worsen. Overall, there is a positive trajectory in strengthening the balance sheet.

Cash Flow

Cash flow analysis reveals inconsistent free cash flow growth, with a notable decline in recent periods. The operating cash flow to net income ratio is positive, suggesting that the company is generating cash from its operations. However, the free cash flow to net income ratio shows variability, indicating challenges in converting profits into free cash. The company needs to stabilize its cash flow generation to ensure long-term financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.10B	6.10B	7.38B	7.22B	10.93B	10.37B
Gross Profit	3.45B	3.45B	3.48B	3.26B	5.57B	4.78B
EBITDA	1.02B	614.80M	-1.93B	-728.90M	2.69B	1.40B
Net Income	554.72M	555.09M	-2.84B	-1.70B	1.31B	359.10M
Balance Sheet
Total Assets	6.47B	6.47B	7.52B	9.15B	11.83B	11.94B
Cash, Cash Equivalents and Short-Term Investments	2.60B	2.60B	3.04B	1.48B	3.46B	3.00B
Total Debt	1.99B	1.99B	2.93B	3.09B	3.75B	5.63B
Total Liabilities	3.24B	3.24B	4.68B	4.10B	5.38B	7.30B
Stockholders Equity	3.23B	3.23B	2.84B	5.05B	6.44B	4.64B
Cash Flow
Free Cash Flow	0.00	668.34M	1.23B	-1.54B	1.72B	1.45B
Operating Cash Flow	0.00	751.47M	1.71B	-914.62M	2.38B	2.03B
Investing Cash Flow	0.00	-254.03M	-181.86M	-625.06M	-618.21M	-347.73M
Financing Cash Flow	0.00	-911.48M	-32.15M	-606.32M	-1.46B	-53.02M

FRONTEO, Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 931.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2158, the sentiment is Positive. The current price of 931 is above the 20-day moving average (MA) of 859.00, above the 50-day MA of 830.86, and above the 200-day MA of 661.89, indicating a bullish trend. The MACD of 23.93 indicates Negative momentum. The RSI at 54.23 is Neutral, neither overbought nor oversold. The STOCH value of 54.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2158.

FRONTEO, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2359	78 Outperform	30.22B	13.15	12.10%	2.59%	1.65%	-2.94%
4396	76 Outperform	33.32B	22.27	24.25%	1.53%	22.28%	19.79%
2349	75 Outperform	25.99B	10.74	11.00%	1.20%	9.56%	7.39%
3393	74 Outperform	27.58B	14.17	25.81%	4.10%	13.54%	15.43%
3788	69 Neutral	25.27B	32.82	9.03%	1.66%	5.38%	-8.86%
2158	60 Neutral	¥35.82B	136.37		―	-18.95%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%