Tomoegawa Corporation (3878) AI Stock Analysis

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Tomoegawa Corporation

(TSE/TYO:3878)

Select Model

Rating:65Neutral

Price Target:JPY 873.00▲(7.51% Upside)

Action:reiterated

Date:10/01/26

The score is supported by attractive valuation (low P/E) and a constructive technical uptrend (price above key moving averages, positive MACD). Offsetting this, overall financial performance is only moderate due to weaker profitability versus prior peaks and especially volatile cash generation with free cash flow currently near breakeven and not tracking earnings.

Positive Factors

Specialty materials capabilitiesTomoegawa operates beyond commodity paper through specialty papers, coatings, and functional materials for industrial and information-related applications. This technology-oriented mix can support differentiated products, broader customer relevance, and more durable market positioning than a purely standardized paper business.

Negative Factors

Weak and volatile free cash flowAlthough operating cash flow rebounded in 2026, free cash flow remains highly inconsistent and was nearly zero relative to reported profit. This weak conversion reduces cash available for shareholders, debt reduction, or reinvestment and makes financial progress more dependent on working-capital and investment patterns.

Tomoegawa Corporation (3878) vs. iShares MSCI Japan ETF (EWJ)

Market Cap: JPY 7.96B
Dividend Yield: 1.85%
Average Volume (3M): 54.14K
Price to Earnings (P/E): 5.8
Beta (1Y): 1.17
Revenue Growth: 9.53%
EPS Growth: 148.98%
Country: Japan
Employees: 1,346
Sector: Basic Materials
Sector Strength: 61
Industry: Paper, Lumber & Forest Products

Tomoegawa Corporation Business Overview & Revenue Model

Company Description

Tomoegawa Co., Ltd., founded in Tokyo, Japan, in 1914, is a multifaceted enterprise engaged in the manufacturing, processing, and sale of an extensive array of advanced materials, primarily serving the Japanese market. Their diverse product lineup in...

Tomoegawa Corporation Financial Statement Overview

Summary

Financials are mixed: revenue is modestly improving and gross margin has strengthened, and leverage has improved with rising equity. However, profitability has cooled versus 2022–2023 and cash flow quality is a key weakness, with volatile operating cash flow and free cash flow near breakeven in 2026 and far below net income.

Income Statement

66Positive

Balance Sheet

61Positive

Cash Flow

45Neutral

Financial statement breakdown
Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	37.13B	35.55B	34.43B	33.69B	34.17B	32.78B
Gross Profit	8.81B	8.28B	7.87B	7.37B	7.53B	6.76B
EBITDA	3.96B	3.55B	3.41B	3.24B	4.22B	4.51B
Net Income	1.24B	945.00M	750.00M	594.00M	1.45B	1.65B
Balance Sheet
Total Assets	52.95B	50.94B	46.09B	45.71B	42.95B	43.57B
Cash, Cash Equivalents and Short-Term Investments	6.15B	5.10B	4.92B	5.42B	4.35B	4.83B
Total Debt	14.95B	15.14B	14.02B	12.83B	12.71B	12.65B
Total Liabilities	29.53B	28.45B	26.45B	26.31B	24.57B	25.96B
Stockholders Equity	18.49B	17.67B	15.24B	14.70B	14.03B	13.48B
Cash Flow
Free Cash Flow	0	6.00M	-613.00M	2.45B	116.00M	2.44B
Operating Cash Flow	0	3.34B	1.80B	4.18B	1.01B	3.36B
Investing Cash Flow	0	-3.73B	-2.76B	-1.74B	-54.00M	-217.00M
Financing Cash Flow	0	473.00M	500.00M	-1.65B	-1.57B	-2.65B

Tomoegawa Corporation Technical Analysis

Technical Analysis SentimentNegative

Last Price812.00

Price Trends

50DMA889.92Negative

100DMA855.90Negative

200DMA849.56Negative

Market Momentum

MACD-28.30Positive

RSI40.42Neutral

STOCH51.48Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3878, the sentiment is Negative. The current price of 812.00 is below the 20-day moving average (MA) of 896.05, below the 50-day MA of 889.92, and below the 200-day MA of 849.56, indicating a bearish trend. The MACD of -28.30 indicates Positive momentum. The RSI at 40.42 is Neutral, neither overbought nor oversold. The STOCH value of 51.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3878.

Tomoegawa Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

JP:3878 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JP:7966	72Outperform	JPY 359.86B	16.61	8.22%	2.75%	7.97%	68.44%
JP:3708	68Neutral	JPY 78.68B	17.55	―	3.67%	1.85%	12.15%
JP:3878	65Neutral	JPY 8.21B	5.82	―	1.85%	9.53%	148.98%
Sector *	61Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
JP:3880	58Neutral	JPY 171.85B	21.38	3.76%	1.35%	3.19%	―
JP:3864	54Neutral	JPY 56.77B	9.30	6.11%	1.72%	-6.05%	82.63%
JP:3863	46Neutral	JPY 143.96B	8.85	3.20%	1.20%	4.09%	-7.89%

* Basic Materials Sector Average

Performance Comparison

JP:3878 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
JP:3878	Tomoegawa Corporation	812.00	57.12	7.57%
JP:7966	Lintec Corporation	5280.00	1470.07	38.59%
JP:3864	Mitsubishi Paper Mills	1277.00	663.98	108.31%
JP:3863	Nippon Paper Industries Co	1246.00	190.37	18.03%
JP:3880	Daio Paper Corporation	1035.00	152.24	17.25%
JP:3708	Tokushu Tokai Paper Co., Ltd.	2151.00	736.08	52.02%

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: Oct 01, 2026

Tomoegawa Corporation AI Stock Analysis