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NEC
(6701)
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Rating:76Outperform
Price Target:
¥5,913.00
▲(24.88% Upside)
Action:Reiterated
Date:07/31/26
The score is driven primarily by improved financial performance (margin and return uplift with a solid balance sheet), supported by a strong price trend above all major moving averages. These positives are tempered by cash-flow volatility (recent FCF decline), uneven top-line growth, and a valuation profile that offers limited dividend support at a ~22x P/E.
Positive Factors
Margin Expansion
Substantial EBIT and net-margin expansion indicates improved profitability across NEC’s large technology and services base. If retained, stronger margins can support reinvestment, improve resilience against project variability, and increase earnings power from the company’s existing customer relationships.
Negative Factors
Uneven Revenue Growth
The uneven top-line trajectory indicates that NEC’s strong profitability improvement has not been matched by consistently expanding demand. Continued revenue variability could limit operating leverage, make project planning less predictable, and reduce confidence in sustained earnings growth over coming quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Margin Expansion
Substantial EBIT and net-margin expansion indicates improved profitability across NEC’s large technology and services base. If retained, stronger margins can support reinvestment, improve resilience against project variability, and increase earnings power from the company’s existing customer relationships.
Read all positive factors
NEC (6701) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥7.11T
Dividend Yield0.8%
Average Volume (3M)5.14M
Price to Earnings (P/E)22.8
Beta (1Y)0.88
Revenue Growth6.90%
EPS Growth50.30%
CountryJP
Employees101,800
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)225.92
Shares Outstanding1,364,249,300
10 Day Avg. Volume5,239,079
30 Day Avg. Volume5,142,106
Financial Highlights & Ratios
PEG Ratio0.35
Price to Book (P/B)2.33
Price to Sales (P/S)1.43
P/FCF Ratio13.91
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥6,250.00Price Target Upside32.00% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)231.85
Revenue Forecast (FY)¥3.83T
NEC Business Overview & Revenue Model
Company Description
NEC Corporation provides information technology services and social infrastructure in Japan and internationally. The company offers systems integration services, including system construction and consulting, maintenance support, and outsourcing, a...
How the Company Makes Money
NEC primarily makes money by selling and operating technology solutions and services under multi-year contracts, combining upfront system delivery revenue with ongoing recurring service fees. Key revenue streams include: (1) Systems integration an...
NEC Earnings Call Summary
Earnings Call Date:Apr 28, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Neutral
The earnings call highlights several positive outcomes, including record revenue and profit growth, strong performance in IT services, and significant free cash flow increase. However, these are balanced by notable challenges such as losses in the submarine cable business and investment outflows. Thus, the overall sentiment is mixed, with a balance of achievements and challenges.Positive Updates
Record Revenue and Profit Growth
Revenue for FY March 2025 was JPY3,423.4 billion, with a non-GAAP operating profit (OP) of JPY311.3 billion, achieving the mid-term management plan's targets a year ahead of schedule. Revenue increased by 5.3% year-on-year, and non-GAAP OP increased by JPY98.9 billion.
Negative Updates
Submarine Cable Business Loss
The submarine cable business recorded a JPY14 billion loss due to force majeure issues, resulting in project delays and additional costs.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Revenue and Profit Growth
Revenue for FY March 2025 was JPY3,423.4 billion, with a non-GAAP operating profit (OP) of JPY311.3 billion, achieving the mid-term management plan's targets a year ahead of schedule. Revenue increased by 5.3% year-on-year, and non-GAAP OP increased by JPY98.9 billion.
Read all positive updates
Company Guidance
In the recent call, the company provided guidance for the fiscal year ending March 2026, projecting revenue of JPY3.36 billion and a non-GAAP operating profit (OP) of JPY320 billion. This represents an increase of JPY20 billion from the mid-term management plan target, despite macroeconomic uncertainties. The adjusted OP is expected to be JPY310 billion, factoring in ongoing structural reforms. The IT services segment is projected to post revenue of JPY2.15 trillion with an adjusted OP of JPY263 billion, while social infrastructure is expected to achieve revenue of JPY1.16 trillion and adjusted OP of JPY100 billion. The company also noted plans to increase investment in growth areas while maintaining a disciplined approach to capital allocation, applying cash ROIC evaluation for M&A transactions. The guidance reflects a continued focus on increasing profitability, even amid challenging conditions, and highlights strategic efforts to enhance operational efficiency and future growth potential.NEC Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
84
Very Positive
Cash Flow
66
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.69T | 3.58T | 3.42T | 3.48T | 3.31T | 3.01T |
| Gross Profit | 1.23T | 1.18T | 1.06T | 1.01T | 958.25B | 886.41B |
| EBITDA | 601.24B | 570.85B | 422.03B | 382.92B | 356.76B | 330.96B |
| Net Income | 300.62B | 270.23B | 175.18B | 149.52B | 114.50B | 141.28B |
Balance Sheet | ||||||
| Total Assets | 4.51T | 4.47T | 4.32T | 4.23T | 4.04T | 3.82T |
| Cash, Cash Equivalents and Short-Term Investments | 434.70B | 659.03B | 584.62B | 476.49B | 419.46B | 430.78B |
| Total Debt | 591.37B | 489.21B | 666.36B | 573.64B | 608.48B | 597.38B |
| Total Liabilities | 2.19T | 2.18T | 2.24T | 2.14T | 2.13T | 2.04T |
| Stockholders Equity | 2.23T | 2.20T | 1.95T | 1.92T | 1.62T | 1.51T |
Cash Flow | ||||||
| Free Cash Flow | 266.15B | 368.14B | 218.00B | 171.46B | 74.41B | 76.41B |
| Operating Cash Flow | 345.58B | 438.46B | 344.41B | 271.23B | 152.13B | 147.52B |
| Investing Cash Flow | -371.04B | -96.15B | -242.17B | -76.02B | -49.59B | -63.38B |
| Financing Cash Flow | -92.46B | -288.12B | 7.03B | -155.51B | -122.79B | -189.62B |
NEC Technical Analysis
Positive
4735.00
Price Trends
4776.06
Positive
4446.70
Positive
4531.34
Positive
Market Momentum
102.06
Negative
70.15
Negative
87.91
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Positive. The current price of 4735 is below the 20-day moving average (MA) of 4823.87, below the 50-day MA of 4776.06, and above the 200-day MA of 4531.34, indicating a bullish trend. The MACD of 102.06 indicates Negative momentum. The RSI at 70.15 is Negative, neither overbought nor oversold. The STOCH value of 87.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.
NEC Risk Analysis
NEC disclosed 36 risk factors in its most recent earnings report. NEC reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
NEC Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | ¥7.11T | 22.76 | 14.20% | 0.80% | 6.90% | 50.30% | |
73 Outperform | ¥7.37T | 23.15 | 15.82% | 1.41% | 1.80% | -13.55% | |
72 Outperform | ¥880.15B | 19.18 | ― | 2.08% | 4.90% | -2.39% | |
71 Outperform | ¥720.99B | 23.49 | 11.35% | 2.25% | 13.99% | 15.49% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | ¥3.08T | 173.10 | 4.14% | 1.50% | 7.37% | -80.70% |
* Technology Sector Average
JP:6701
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NEC Corporate Events
NEC Posts Q1 FY27/3 Results and Overhauls Segment Reporting
Jul 29, 2026
NEC Corporation has released its financial results for the first quarter of the fiscal year ending March 31, 2027, alongside updated forecasts for the full fiscal year. The disclosure includes net profit attributable to owners of the parent and pr...
NEC Delivers Strong Q1 Earnings and Tightens Focus on Non-GAAP Profit Metrics
Jul 29, 2026
NEC reported strong results for the three months to June 30, 2026, with revenue rising 14.5% year-on-year to ¥819.8 billion and operating profit jumping 66.1%. Net profit attributable to owners of the parent surged 157.4%, while non-GAAP oper...
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.