Cluster Technology Co., Ltd. (4240) AI Stock Analysis

Cluster Technology Co., Ltd.

(TSE/TYO:4240)

Select Model

Rating:63Neutral

Price Target:JPY 629.00▲(6.43% Upside)

Action:reiterated

Date:10/21/26

The company's financial foundation is a major strength, with robust growth, high profitability, and a pristine, debt-free balance sheet. However, this is heavily offset by extreme technical overbought conditions (RSI > 97) and a very expensive valuation (P/E > 40), which together signal a high risk of a price correction. The overall score reflects a strong business facing significant market timing and valuation headwinds.

Positive Factors

Accelerating revenue and marginsAccelerating revenue and expanding operating margin indicate stronger demand and improved operating leverage. If sustained, this combination can increase earnings capacity, support reinvestment in HPC solutions, and strengthen the company’s competitive position over the next several quarters.

Negative Factors

Negative EPS growthNegative EPS growth signals that per-share earnings have not kept pace, despite stronger reported revenue and operating performance. This can limit the company’s ability to compound shareholder returns and suggests that earnings momentum remains less durable than the recent top-line improvement.

Cluster Technology Co., Ltd. (4240) vs. iShares MSCI Japan ETF (EWJ)

Market Cap: JPY 3.95B
Dividend Yield: 1.02%
Average Volume (3M): 528.39K
Price to Earnings (P/E): 33.1
Beta (1Y): 0.68
Revenue Growth: 14.78%
EPS Growth: -20.71%
Country: Japan
Employees: 76
Sector: Technology
Sector Strength: 61
Industry: Industrial - Machinery

Cluster Technology Co., Ltd. Business Overview & Revenue Model

Company Description

Cluster Technology Co.,Ltd., established in 1991 and based in Osaka, Japan, specializes in the production and sale of diverse resin composite materials throughout the country. Their offerings include Epohard, a resin composite formulated with inorgan...

How the Company Makes Money

Cluster Technology Co., Ltd. primarily generates revenue by delivering HPC/IT infrastructure projects in which it designs and integrates systems and then supplies the required hardware and software as a bundled solution. Key revenue streams typically...

Cluster Technology Co., Ltd. Financial Statement Overview

Summary

Strong revenue growth of 16.9% and healthy margins (41.4% gross, 9.7% net) are supported by an exceptionally strong balance sheet with near-zero debt (0.5% debt-to-equity). Cash flow generation is solid, with operating cash flow exceeding net income by 1.7x. The overall financial health is excellent, though ROE is moderate at 7.2%.

Income Statement

85Very Positive

Balance Sheet

95Very Positive

Cash Flow

80Positive

Financial statement breakdown
Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	1.28B	1.30B	1.02B	918.99M	925.05M	905.98M
Gross Profit	531.19M	537.73M	427.51M	386.86M	364.41M	380.31M
EBITDA	215.02M	232.36M	152.65M	116.37M	110.00M	124.82M
Net Income	101.69M	125.47M	100.66M	57.36M	59.29M	114.97M
Balance Sheet
Total Assets	1.93B	2.02B	1.84B	1.74B	1.71B	1.64B
Cash, Cash Equivalents and Short-Term Investments	772.25M	1.09B	989.05M	892.84M	875.78M	946.24M
Total Debt	4.76M	8.15M	10.80M	13.39M	11.73M	14.01M
Total Liabilities	203.17M	270.30M	184.39M	192.05M	211.65M	201.26M
Stockholders Equity	1.73B	1.75B	1.65B	1.55B	1.49B	1.43B
Cash Flow
Free Cash Flow	0	128.42M	113.22M	21.78M	-62.38M	77.43M
Operating Cash Flow	0	217.00M	148.56M	118.41M	27.41M	120.80M
Investing Cash Flow	0	100.75M	-49.76M	-98.95M	-95.59M	-43.51M
Financing Cash Flow	0	-24.99M	-2.59M	-2.40M	-2.27M	-2.23M

Cluster Technology Co., Ltd. Technical Analysis

Technical Analysis SentimentPositive

Last Price591.00

Price Trends

50DMA420.54Positive

100DMA367.78Positive

200DMA375.11Positive

Market Momentum

MACD70.87Positive

RSI53.45Neutral

STOCH5.08Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4240, the sentiment is Positive. The current price of 591.00 is above the 20-day moving average (MA) of 578.45, above the 50-day MA of 420.54, and above the 200-day MA of 375.11, indicating a bullish trend. The MACD of 70.87 indicates Positive momentum. The RSI at 53.45 is Neutral, neither overbought nor oversold. The STOCH value of 5.08 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4240.

Cluster Technology Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

JP:4240 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JP:6866	78Outperform	JPY 120.91B	15.61	―	2.46%	16.76%	35.84%
JP:6777	76Outperform	JPY 206.04B	22.53	34.43%	1.45%	45.04%	85.49%
JP:6853	71Outperform	JPY 18.86B	19.03	―	2.93%	2.51%	0.17%
JP:6858	66Neutral	JPY 8.30B	9.75	―	3.65%	15.62%	50.30%
JP:4240	63Neutral	JPY 3.94B	33.09	―	1.02%	14.78%	-20.71%
JP:6951	63Neutral	JPY 354.57B	22.39	―	2.11%	-18.36%	-19.56%
Sector *	61Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

JP:4240 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
JP:4240	Cluster Technology Co., Ltd.	591.00	276.32	87.81%
JP:6777	Santec Corporation	17230.00	8393.06	94.98%
JP:6853	Kyowa Electronic Instruments Co., Ltd.	735.00	67.89	10.18%
JP:6858	Ono Sokki Co., Ltd.	740.00	169.65	29.74%
JP:6866	Hioki E.E.Corporation	8960.00	3170.96	54.78%
JP:6951	JEOL Ltd.	6856.00	1735.63	33.90%

Cluster Technology Co., Ltd. Corporate Events

Cluster Technology Q1 Profits Slump Despite Strong Balance Sheet

Aug 12, 2026

Cluster Technology Co., Ltd. reported a decline in performance for the first quarter of the fiscal year ending March 2027, with net sales falling 7.5% year on year to ¥290 million and operating profit dropping 59.4% to ¥18 million. Ordinary...

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 21, 2026

Cluster Technology Co., Ltd. AI Stock Analysis