Nippon Gear Co., Ltd. (6356) AI Stock Analysis

Nippon Gear Co., Ltd.

(TSE/TYO:6356)

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Rating:78Outperform

Price Target:JPY 1,309.00▲(12.26% Upside)

Action:reiterated

Date:09/15/26

The overall score of 78 reflects a company with excellent financial fundamentals, underscored by high profitability and a debt-free balance sheet. The stock's technical posture is constructive, trading above key moving averages, though momentum indicators warrant some caution. A low P/E ratio further supports the positive view, suggesting reasonable valuation. The primary driver of the score is the company's robust financial performance.

Positive Factors

Margin ExpansionThe substantial expansion in net and EBIT margins indicates that profitability has strengthened beyond simple revenue growth. Better pricing, product mix, and/or cost control can improve earnings resilience, provide more funds for investment, and support stronger returns over the next several quarters.

Negative Factors

Choppy Revenue TrendUneven revenue performance indicates that demand has not followed a consistently rising path, which can make capacity planning and earnings forecasting more difficult. Continued top-line volatility could limit the durability of recent profit improvements if margin gains are not supported by sustained sales growth.

Nippon Gear Co., Ltd. (6356) vs. iShares MSCI Japan ETF (EWJ)

Market Cap: JPY 16.60B
Dividend Yield: 0.94%
Average Volume (3M): 403.58K
Price to Earnings (P/E): 8.0
Beta (1Y): 0.39
Revenue Growth: 6.27%
EPS Growth: 40.78%
Country: Japan
Employees: 393
Sector: General
Sector Strength: 55
Industry: Electrical Equipment & Parts

Nippon Gear Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Gear Co., Ltd. specializes in the development, manufacturing, and distribution of industrial mechanical components, serving both domestic and international markets. Its extensive product portfolio includes valve actuators, widely utilized acro...

How the Company Makes Money

Nippon Gear makes money primarily by manufacturing and selling mechanical and electromechanical components to business customers (B2B), with revenue recognized from product shipments. Key revenue streams include: (1) Automotive-related sales: supplyi...

Nippon Gear Co., Ltd. Financial Statement Overview

Summary

Nippon Gear demonstrates strong financial health with high profitability (net margin 17.7%), an exceptionally strong balance sheet (debt/equity 0.005), and robust cash flow generation. The consistent margin expansion and minimal leverage are key strengths, though revenue growth has been modest.

Income Statement

85Very Positive

Balance Sheet

95Very Positive

Cash Flow

85Very Positive

Financial statement breakdown
Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	9.20B	9.88B	9.56B	9.62B	7.52B	7.57B
Gross Profit	4.23B	4.81B	4.27B	4.43B	3.14B	2.27B
EBITDA	2.10B	2.70B	2.52B	2.37B	1.20B	680.94M
Net Income	1.31B	1.75B	1.55B	1.54B	685.13M	295.83M
Balance Sheet
Total Assets	14.10B	17.20B	15.42B	14.85B	12.91B	11.37B
Cash, Cash Equivalents and Short-Term Investments	4.64B	6.13B	4.50B	4.48B	4.30B	3.53B
Total Debt	402.97M	72.17M	109.80M	366.46M	511.92M	658.37M
Total Liabilities	3.52B	2.72B	2.86B	3.76B	3.47B	2.57B
Stockholders Equity	10.58B	14.48B	12.56B	11.10B	9.44B	8.79B
Cash Flow
Free Cash Flow	0	1.81B	795.46M	421.68M	977.46M	706.17M
Operating Cash Flow	0	2.42B	1.29B	748.94M	1.27B	803.87M
Investing Cash Flow	0	-641.92M	-884.92M	-331.61M	-297.71M	-100.26M
Financing Cash Flow	0	-151.79M	-384.31M	-245.05M	-201.18M	-125.11M

Nippon Gear Co., Ltd. Technical Analysis

Technical Analysis SentimentNegative

Last Price1166.00

Price Trends

50DMA1294.35Negative

100DMA1367.30Negative

200DMA1335.89Negative

Market Momentum

MACD-52.43Positive

RSI41.69Neutral

STOCH49.69Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6356, the sentiment is Negative. The current price of 1166.00 is below the 20-day moving average (MA) of 1224.75, below the 50-day MA of 1294.35, and below the 200-day MA of 1335.89, indicating a bearish trend. The MACD of -52.43 indicates Positive momentum. The RSI at 41.69 is Neutral, neither overbought nor oversold. The STOCH value of 49.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6356.

Nippon Gear Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

JP:6356 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JP:7296	81Outperform	JPY 188.75B	9.60	―	5.50%	7.40%	25.62%
JP:6356	78Outperform	JPY 16.35B	7.96	―	0.94%	6.27%	40.78%
JP:7231	71Outperform	JPY 69.72B	6.88	―	5.23%	1.87%	46.10%
JP:7278	66Neutral	JPY 187.35B	15.36	6.44%	6.30%	0.21%	0.59%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
JP:6473	54Neutral	JPY 630.94B	29.02	2.71%	3.31%	3.66%	12.13%
JP:7220	50Neutral	JPY 160.59B	110.09	―	1.44%	3.50%	-77.77%

* General Sector Average

Performance Comparison

JP:6356 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
JP:6356	Nippon Gear Co., Ltd.	1166.00	371.20	46.70%
JP:6473	JTEKT Corporation	1965.50	404.95	25.95%
JP:7278	Exedy Corporation	5160.00	195.77	3.94%
JP:7220	Musashi Seimitsu Industry Co., Ltd.	2432.00	-1106.59	-31.27%
JP:7231	Topy Industries, Limited	2966.00	227.64	8.31%
JP:7296	F.C.C.Co., Ltd.	3945.00	917.67	30.31%

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: Sep 15, 2026

Nippon Gear Co., Ltd. AI Stock Analysis