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

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Cluster Technology Co., Ltd.

(TSE/TYO:4240)

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Rating:68Neutral

Price Target:JPY 577.00▲(9.07% Upside)

Action:downgraded

Date:10/21/26

The overall score of 68 is primarily anchored by the company's exceptional balance sheet and robust cash flow generation. However, the stock is heavily penalized by its stretched valuation (P/E of 40.31) and deeply overbought technical indicators (RSI of 97.8), which collectively present significant near-term price risks despite the pristine underlying fundamentals.

Positive Factors

Revenue and Margin ExpansionRevenue growth accelerated from roughly flat in 2024 to 16.9% in 2026, while operating margin rose from 7.7% to 12.6%. This combination indicates stronger operating leverage and provides greater earnings capacity to support delivery capabilities, services, and future growth.

Negative Factors

Negative EPS GrowthReported negative EPS growth indicates that per-share earnings have not kept pace despite stronger revenue and operating margins. If this persists, it could limit the conversion of business expansion into shareholder-level earnings and weaken the durability of recent performance.

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

Market Cap: JPY 3.54B
Dividend Yield: 1.17%
Average Volume (3M): 544.34K
Price to Earnings (P/E): 29.6
Beta (1Y): 0.54
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

The company displays outstanding financial health, characterized by strong revenue acceleration, expanding operating margins, and surging operating cash flows. A practically non-existent debt-to-equity ratio significantly mitigates financial risk, easily compensating for a modest 7.1% return on equity.

Income Statement

84Very Positive

Balance Sheet

92Very Positive

Cash Flow

85Very Positive

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 SentimentNeutral

Last Price529.00

Price Trends

50DMA462.02Positive

100DMA389.66Positive

200DMA385.79Positive

Market Momentum

MACD22.26Positive

RSI46.81Neutral

STOCH26.61Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4240, the sentiment is Neutral. The current price of 529.00 is below the 20-day moving average (MA) of 658.25, above the 50-day MA of 462.02, and above the 200-day MA of 385.79, indicating a neutral trend. The MACD of 22.26 indicates Positive momentum. The RSI at 46.81 is Neutral, neither overbought nor oversold. The STOCH value of 26.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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:6777	74Outperform	JPY 234.86B	21.50	37.71%	1.54%	60.79%	95.88%
JP:6951	70Outperform	JPY 340.75B	21.64	―	2.19%	-14.83%	-11.19%
JP:4240	68Neutral	JPY 3.42B	29.62	―	1.17%	14.78%	-20.71%
JP:6858	65Neutral	JPY 8.14B	9.79	―	3.63%	15.62%	50.30%
JP:6866	63Neutral	JPY 118.32B	15.05	―	2.55%	16.76%	35.84%
Sector *	61Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
JP:6853	60Neutral	JPY 18.20B	26.99	―	2.93%	-3.37%	-32.05%

* 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.	529.00	204.43	62.98%
JP:6777	Santec Corporation	19540.00	11196.74	134.20%
JP:6853	Kyowa Electronic Instruments Co., Ltd.	735.00	96.10	15.04%
JP:6858	Ono Sokki Co., Ltd.	743.00	166.86	28.96%
JP:6866	Hioki E.E.Corporation	8640.00	3045.88	54.45%
JP:6951	JEOL Ltd.	6622.00	2060.23	45.16%

Cluster Technology Co., Ltd. Corporate Events

Cluster Technology Reports September 2026 Sales and Profit Declines

Nov 13, 2026

Cluster Technology Co., Ltd., listed on the Tokyo Standard and Nagoya Main markets, reported September 2026 net sales of ¥615 million, down 7.4% from a year earlier, while operating profit fell 57.0% to ¥48 million, ordinary profit declined 55.7% to...

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