Itochu (ITOCY) AI Stock Analysis

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Itochu

(OTC:ITOCY)

77Outperform

Itochu's strong financial performance is the primary driver of its overall score, reflecting robust revenue growth, profitability, and cash flow generation. The technical analysis presents a mixed picture with short-term caution but medium-term optimism, while valuation metrics indicate the stock's reasonable pricing and attractive dividend yield. This balanced assessment results in a favorable stock score.

Itochu (ITOCY) vs. S&P 500 (SPY)

Market Cap

$70.16B

Dividend Yield1.93%

Average Volume (3M)4.24K

Price to Earnings (P/E)12.3

Beta (1Y)0.58

Revenue Growth-2.09%

EPS Growth12.12%

CountryUS

Employees113,733

SectorIndustrials

Sector Strength66

IndustryConglomerates

Share Statistics

EPS (TTM)7.97

Shares Outstanding792,445,000

10 Day Avg. Volume12,719

30 Day Avg. Volume4,239

Financial Highlights & Ratios

PEG Ratio1.02

Price to Book (P/B)N/A

Price to Sales (P/S)0.48

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Itochu Business Overview & Revenue Model

Company DescriptionITOCHU Corporation engages in trading and importing/exporting various products worldwide. The company's Textile segment produces and sells fiber and garment materials, textiles fabrics, apparel, and industrial materials; and imports lifestyle brands, fashion accessories, and garments in various areas, such as luxury, casual, and sports. Its Machinery segment provides engineering, procurement, and construction services; operates water and environmental, infrastructure, renewable energy, oil and gas, petrochemical, and independent power producer projects and plants; sells and leases aircraft and related equipment; sells automobiles, construction machinery, electronic systems, industrial machinery, and medical devices; and owns and charters ships. The company's Metals & Minerals segment engages in mining and trading of iron ore, coal, uranium, base metals, and minor metals; trading in non-ferrous metal materials; and processing and trading in steel products. Its Energy & Chemicals segment trades in crude oil, petroleum products, LPG, LNG, natural gas, hydrogen, organic and inorganic chemicals, synthetic resins, household goods, fine chemicals, pharmaceuticals, and electronic materials, as well as generates and trades in power. The company's Food segment produces, distributes, and retails food products. Its General Products & Realty segment produces and sells paper, pulp, natural rubber, tire, and wood products and materials; develops and operates real estate properties, such as housing, logistics facilities, and other projects; and offers logistics services. The company's ICT & Financial Business segment offers IT solutions, Internet related and venture capital services, mobile telephone equipment and services, BPO, broadcasting and communications, entertainment and content services, outsourcing services for healthcare and preventive medicine, and financial and insurance brokerage services. The company was founded in 1858 and is headquartered in Tokyo, Japan.

How the Company Makes MoneyItochu Corporation generates revenue through its diversified operations across multiple sectors. The company's revenue streams are primarily derived from trading and distributing goods, investing in various industries, and providing comprehensive supply chain solutions. Key revenue streams include the sale of textiles, machinery, metals, energy products, and food commodities. Additionally, Itochu benefits from strategic partnerships and joint ventures that enhance its global reach and market presence. The company's investments in energy and natural resources, as well as its involvement in real estate and infrastructure projects, further contribute to its earnings. Itochu leverages its extensive network and expertise in logistics to optimize supply chains, thereby adding value to its trading operations.

Itochu Financial Statement Overview

Summary

Itochu demonstrates strong financial health with consistent revenue growth, solid profitability margins, and robust cash flow generation. The balance sheet shows moderate leverage with effective equity utilization. Overall, financial performance is strong, although there is some pressure on EBITDA margins.

Income Statement

Very Positive

Itochu shows strong financial performance with a healthy revenue growth rate of 3.69% TTM. The gross profit margin is solid at 16.02%, and the net profit margin stands at a commendable 5.69%. EBIT and EBITDA margins are robust at 4.94% and 8.72% respectively, indicating efficient operations and profitability. However, slight pressure on EBITDA margin compared to EBIT margin suggests potential operational cost considerations.

Balance Sheet

Positive

The balance sheet is stable with an equity ratio of 38.88%, reflecting a strong capital base. The debt-to-equity ratio is 0.62, indicating moderate leverage, which is manageable but should be monitored. Return on equity is impressive at 14.79%, showing effective utilization of shareholder funds.

Cash Flow

Very Positive

Itochu's cash flow is strong with a significant free cash flow growth rate of 15.36%. The operating cash flow to net income ratio is 1.31, indicating healthy cash generation relative to net income. The free cash flow to net income ratio is 1.08, underscoring the company's ability to convert earnings into free cash flow.

TTM	Mar 2024
Breakdown
Income Statement		Total Revenue
14.55T	14.03T
	Gross Profit
2.33T	2.23T
	EBIT
718.72B	711.85B
	EBITDA
1.27T	1.29T
	Net Income Common Stockholders
827.31B	801.77B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
622.48B	689.06B
	Total Assets
14.49T	14.49T
	Total Debt
4.40T	4.40T
	Net Debt
3.80T	3.80T
	Total Liabilities
8.50T	8.50T
	Stockholders Equity
5.43T	5.43T
Cash Flow		Free Cash Flow
894.77B	775.56B
	Operating Cash Flow
1.09T	978.11B
	Investing Cash Flow
-419.59B	-205.99B
	Financing Cash Flow
-673.60B	-413.33B

Itochu Technical Analysis

Technical Analysis Sentiment

Positive

Last Price99.00

Price Trends

50DMA

90.91

Positive

100DMA

93.53

Positive

200DMA

97.35

Positive

Market Momentum

MACD

1.08

Negative

RSI

62.94

Neutral

STOCH

99.99

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ITOCY, the sentiment is Positive. The current price of 99 is above the 20-day moving average (MA) of 92.19, above the 50-day MA of 90.91, and above the 200-day MA of 97.35, indicating a bullish trend. The MACD of 1.08 indicates Negative momentum. The RSI at 62.94 is Neutral, neither overbought nor oversold. The STOCH value of 99.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ITOCY.

Itochu Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITOCY	77 Outperform	$70.16B	12.32	15.64%	1.93%	-2.09%	12.12%
HON	73 Outperform	$127.60B	22.79	33.10%	2.23%	5.05%	2.73%
Sector *	63 Neutral	$4.14B	11.23	5.47%	215.40%	4.10%	-8.63%
MMM	59 Neutral	$73.53B	18.05	94.15%	2.08%	-24.93%	―

* Industrials Sector Average

Performance Comparison

ITOCY

Itochu

99.00

10.18

11.46%

MMM

136.06

46.69

52.24%

HON

Honeywell International

197.31

8.30

4.39%

Itochu Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: 5.71% | Next Earnings Date: May 2, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong overall performance with notable increases in net profit, core profit, and cash flow, supported by strategic growth in key segments. However, challenges remain in certain areas such as Metals & Minerals, Energy & Chemicals, and North American operations.

Highlights

Increase in Consolidated Net Profit

Consolidated net profit increased by 6% or JPY 25.5 billion year-on-year to JPY 438.4 billion, achieving 50% of the annual forecast.

Strong Core Profit and Cash Flow Performance

Core profit reached JPY 396 billion, maintaining the second highest profit level after FYE 2023. Core operating cash flows exceeded JPY 500 billion for the first time, reaching JPY 513 billion, setting an all-time high.

Segment-Wise Profit Growth

Textile, Machinery, Food, The 8th, and others saw profit increases. Notable growth drivers included apparel business, strong car sales, and pork business turnaround.

Record Operating Cash Flows

Operating cash flows reached JPY 578.6 billion, setting a record high due to stable performance in multiple segments and dividends from investments.

Shareholder Returns

Increased dividend per share to JPY 200, a JPY 40 increase, marking the 10th consecutive year of dividend increase. Largest ever share buybacks of JPY 150 billion underway.

Lowlights

Profit Decline in Metals & Minerals and Energy & Chemicals

Metals & Minerals and Energy & Chemicals segments saw a decrease in profit due to operational issues and absence of previous year's extraordinary gains.

Challenges in North American Construction Materials

Profit down due to higher costs and market downturn affecting the North American Construction Materials business.

Flat Performance in ICT and Financial Business

Results were almost flat year-on-year due to absence of extraordinary gains recorded in the previous fiscal year and lower profit in the mobile phone business.

Company Guidance

During the Q2 2025 earnings call, Keita Ishii, President of ITOCHU Corporation, outlined a robust first half performance with consolidated net profit increasing by 6% year-on-year to JPY 438.4 billion, reaching 50% of the annual forecast. Core profit was reported at JPY 396 billion, marking the second highest level after FYE 2023, with notable contributions from sectors like Textile, Chemicals, Food, and ICT. Operating cash flows set a record high at JPY 578.6 billion, driven by strong performances in Machinery and Food. Despite a net investment cash outflow of JPY 192 billion, core free cash flows remained positive at JPY 321 billion. The company maintained a strong financial position with total shareholders' equity rising to JPY 5.6 trillion and a slight improvement in net DER to 0.47x. Shareholder returns were emphasized with a commitment to a 50% payout ratio and a dividend increase to JPY 200 per share, alongside significant share buybacks totaling JPY 150 billion. Looking forward, ITOCHU aims to strengthen its profit base and continue growth investments to meet fiscal year targets and enhance corporate value.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.