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

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Nippon Gear Co., Ltd.

(TSE/TYO:6356)

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Rating:74Outperform

Price Target:JPY 1,208.00▲(14.50% Upside)

Action:reiterated

Date:11/07/26

Nippon Gear Co., Ltd. scores a 74, anchored primarily by its exceptionally strong fundamental financials and highly attractive valuation. The company boasts remarkable margin expansion, a practically unlevered balance sheet, and a very low P/E ratio. However, the overall score is weighed down by severe technical weakness, as the stock is currently in a strong downtrend and trading significantly below its major moving averages, despite reaching oversold levels.

Positive Factors

Material Margin ExpansionThe sustained expansion in net and EBIT margins indicates stronger profitability across the business, potentially reflecting improved pricing, product mix, or cost control. Higher margins can support reinvestment, strengthen resilience, and provide greater earnings power over the next several quarters.

Negative Factors

Uneven Revenue GrowthChoppy revenue performance makes the company’s top-line trajectory less predictable than its margin trend. Repeated declines can limit operating leverage, complicate capacity and investment planning, and make future earnings growth more dependent on recoveries in specific end markets.

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

Market Cap: JPY 15.02B
Dividend Yield: 1.04%
Average Volume (3M): 415.92K
Price to Earnings (P/E): 7.2
Beta (1Y): 0.59
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

Exceptional financial health characterized by robust margin expansion, a nearly debt-free balance sheet, and surging free cash flow generation.

Income Statement

88Very Positive

Balance Sheet

95Very Positive

Cash Flow

86Very 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 Price1055.00

Price Trends

50DMA1253.41Negative

100DMA1335.27Negative

200DMA1340.59Negative

Market Momentum

MACD-60.91Negative

RSI38.67Neutral

STOCH49.93Neutral

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 1055.00 is below the 20-day moving average (MA) of 1118.20, below the 50-day MA of 1253.41, and below the 200-day MA of 1340.59, indicating a bearish trend. The MACD of -60.91 indicates Negative momentum. The RSI at 38.67 is Neutral, neither overbought nor oversold. The STOCH value of 49.93 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	77Outperform	JPY 203.45B	9.37	―	5.17%	10.24%	30.00%
JP:6356	74Outperform	JPY 15.02B	7.21	―	1.04%	6.27%	40.78%
JP:7231	71Outperform	JPY 74.91B	6.40	―	4.82%	5.62%	38.84%
JP:7278	66Neutral	JPY 194.28B	15.83	6.44%	6.11%	0.21%	0.59%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
JP:6473	54Neutral	JPY 664.84B	30.84	2.71%	3.11%	3.66%	12.13%
JP:7220	47Neutral	JPY 141.31B	81.69	―	1.62%	3.60%	-81.10%

* 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.	1055.00	242.34	29.82%
JP:6473	JTEKT Corporation	2088.50	535.68	34.50%
JP:7278	Exedy Corporation	5320.00	317.95	6.36%
JP:7220	Musashi Seimitsu Industry Co., Ltd.	2155.00	-727.27	-25.23%
JP:7231	Topy Industries, Limited	3215.00	496.61	18.27%
JP:7296	F.C.C.Co., Ltd.	4290.00	1182.63	38.06%

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: Nov 07, 2026

Nippon Gear Co., Ltd. AI Stock Analysis