eSOL Co., Ltd. (4420) AI Stock Analysis

• Market Cap: ¥9.79B
• Dividend Yield: 1.06%
• Average Volume (3M): 24.06K
• Price to Earnings (P/E): 15.8
• Beta (1Y): 1.40
• Revenue Growth: 23.68%
• EPS Growth: 577.69%
• Country: JP
• Employees: 523
• Sector: Technology
• Sector Strength: 77
• Industry: Technology Distributors
• EPS (TTM): 5.91
• Shares Outstanding: 20,000,000
• 10 Day Avg. Volume: 23,430
• 30 Day Avg. Volume: 24,056
• PEG Ratio: 0.74
• Price to Book (P/B): 2.27
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

eSOL Co., Ltd. has a solid financial foundation with strong revenue growth and profitability, supported by a robust balance sheet with no debt liabilities. However, historical cash flow volatility presents a risk that could affect long-term performance. Technical indicators suggest moderate momentum and possible overbought conditions. Valuation metrics show potential undervaluation, making it an intriguing investment opportunity.

eSOL Co., Ltd. Business Overview & Revenue Model

Company Description

eSOL Co.,Ltd. designs, plans, operates, and maintains embedded software solutions and logistics systems in Japan. The company offers real-time operating systems(RTOS) that include Extended T-Kernel, RTOS for embedded systems; POSIX, a compliant RTOS that provides support for pthread, signal, and inter process communication on the system level; process model-based RTOS with memory protection; compact RTOS with small footprint; and RTOS for multi-core processors, as well as software development kit for many-core processors. It also provides eBinder, a development suite for embedded software; FAT12/16/32, VFAT, and exFAT-compatible file systems for embedded systems; software platforms; and evaluation kits. In addition, the company offers application middleware, including graphical user interface (GUI), computer vision, and embedded database solutions; automotive software, such as AUBIST classic and adaptive platforms, and ECU diagnostics and reprogramming. Further, it develops and sells devices primarily focused on portable terminals, automotive printers, and sensor device products; and software systems to solve diversifying issues on the ground. The company was formerly known as ERG Co., Ltd. and changed its name to eSOL Co.,Ltd. in May 2001. eSOL Co.,Ltd. was founded in 1975 and is headquartered in Tokyo, Japan.

How the Company Makes Money

eSOL Co., Ltd. generates revenue primarily through the licensing of its real-time operating systems and middleware solutions to manufacturers and developers in various industries. The company also offers consulting services, technical support, and custom software development, which contribute to its income. Key revenue streams include software licensing fees, service contracts, and project-based custom development fees. Partnerships with hardware manufacturers and technology firms help eSOL extend its market reach and integrate its solutions into a wide array of embedded systems, further bolstering its earnings.

eSOL Co., Ltd. Financial Statement Overview

Summary

eSOL Co., Ltd. presents a strong financial position with excellent revenue growth and improved profitability metrics. The balance sheet is solid with no debt, enhancing stability and reducing risk. However, the cash flow statement reveals some historical inconsistencies that need attention for sustained long-term performance.

Income Statement

eSOL Co., Ltd. has demonstrated strong revenue growth, with a notable increase of 23.69% from 2023 to 2024. The company has recovered from previous years of low profitability to achieve a healthy gross profit margin of 37% and a net profit margin of 7.49% in 2024. The EBIT margin also improved significantly to 9.35%, indicating better operational efficiency. However, past volatility in earnings and a recent negative EBIT margin in 2023 highlight some concerns about consistency.

Balance Sheet

The company's balance sheet is robust, with a strong equity base, as shown by a rising equity ratio of approximately 71.37% in 2024. eSOL has no debt, which eliminates leverage-related risks and supports financial stability. The return on equity has improved to 17.89%, reflecting efficient use of equity to generate profits. The high cash reserves further bolster the company's financial health.

Cash Flow

eSOL Co., Ltd. has seen a substantial improvement in free cash flow, which grew significantly from -161 million JPY in 2023 to 1,061 million JPY in 2024. This turnaround reflects better cash management and operational efficiency. However, the volatile historical operating cash flow and negative figures in recent years raise concerns about consistency in cash generation.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
11.91B	9.63B	8.87B	8.94B	9.04B
	Gross Profit
4.41B	3.30B	2.93B	2.80B	3.20B
	EBIT
1.11B	-82.16M	-353.81M	72.68M	682.51M
	EBITDA
1.21B	20.00M	-274.00M	145.68M	762.42M
	Net Income Common Stockholders
892.39M	136.72M	-357.83M	200.70M	676.28M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.27B	3.50B	3.98B	4.22B	4.67B
	Total Assets
6.99B	7.64B	7.21B	7.28B	7.47B
	Total Debt
0.00	0.00	0.00	0.00	0.00
	Net Debt
-3.27B	-3.39B	-3.98B	-4.02B	-4.46B
	Total Liabilities
2.00B	1.97B	1.80B	1.51B	1.72B
	Stockholders Equity
4.99B	5.66B	5.41B	5.78B	5.75B
Cash Flow		Free Cash Flow
1.04B	-161.09M	76.17M	-329.86M	912.70M
	Operating Cash Flow
1.10B	-140.97M	161.40M	-199.71M	1.06B
	Investing Cash Flow
-29.04M	-232.60M	-89.59M	-137.39M	-353.44M
	Financing Cash Flow
-1.29B	-112.40M	-111.61M	-111.47M	-141.53M

eSOL Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 536.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4420, the sentiment is Negative. The current price of 536 is below the 20-day moving average (MA) of 575.90, below the 50-day MA of 578.52, and below the 200-day MA of 662.48, indicating a bearish trend. The MACD of -4.53 indicates Positive momentum. The RSI at 36.02 is Neutral, neither overbought nor oversold. The STOCH value of 3.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4420.

eSOL Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4420	71 Outperform	¥9.79B	15.79		1.06%	23.68%	577.69%
3626	62 Neutral	¥1.07T	21.38		1.52%	3.33%	-5.12%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%