NEC (6701) AI Stock Analysis

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JP:6701 Dividends

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NEC

(OTC:6701)

78Outperform

NEC's overall stock score reflects its robust financial performance and positive earnings outlook, tempered by mixed technical indicators and a moderate valuation. Strong growth in IT services and recent upward forecast revisions are significant positives, while potential risks in telecom and submarine systems warrant caution.

NEC (6701) vs. S&P 500 (SPY)

Market Cap

¥4.38T

Dividend Yield0.85%

Average Volume (3M)5.33M

Price to Earnings (P/E)23.0

Beta (1Y)1.05

Revenue Growth-0.91%

EPS Growth52.93%

CountryJP

Employees105,276

SectorTechnology

Sector Strength46

IndustryInformation Technology Services

Share Statistics

EPS (TTM)140.28

Shares Outstanding1,364,249,300

10 Day Avg. Volume4,853,860

30 Day Avg. Volume5,333,810

Financial Highlights & Ratios

PEG Ratio0.43

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

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

P/FCF RatioN/A

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

¥13,347.60

Price Target Upside316.20% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

NEC Business Overview & Revenue Model

Company DescriptionNEC Corporation (6701) is a leading Japanese multinational corporation that specializes in providing information technology (IT) and network solutions. The company operates in various sectors including public services, enterprise, network services, and system platforms. NEC offers a wide range of products and services such as integrated IT and network technologies, telecommunications equipment, biometric authentication systems, and computing solutions, serving both government and private sector clients globally.

How the Company Makes MoneyNEC makes money through a diverse revenue model primarily based on its IT and network solutions offerings. Key revenue streams include system integration services, where NEC designs and implements IT systems for clients in sectors like government, healthcare, and finance. Additionally, NEC generates revenue from the sale of telecommunications equipment and network infrastructure, including 5G technologies, to service providers and enterprise clients. The company also benefits from its significant investments in R&D, which drive innovation and enhance its product offerings. NEC has established partnerships with various enterprises and government bodies, which contribute to its earnings by expanding its market reach and solidifying its position as a trusted technology provider.

NEC Financial Statement Overview

Summary

Income Statement

Balance Sheet

Cash Flow

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
3.41T	3.48T	3.31T	3.01T	2.99T	3.10T
	Gross Profit
1.04T	1.01T	958.25B	886.41B	861.18B	887.56B
	EBIT
339.78B	192.19B	170.45B	132.53B	153.76B	127.61B
	EBITDA
403.03B	375.71B	353.75B	313.06B	331.06B	302.23B
	Net Income Common Stockholders
187.03B	149.52B	114.50B	141.28B	149.61B	99.97B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
480.90B	476.49B	435.24B	448.33B	532.92B	364.84B
	Total Assets
4.22T	4.23T	3.98T	3.76T	3.67T	3.12T
	Total Debt
684.76B	548.64B	608.48B	597.38B	702.86B	675.42B
	Net Debt
203.86B	72.15B	189.02B	166.60B	179.51B	316.17B
	Total Liabilities
2.06T	2.14T	2.07T	1.98T	2.11T	2.01T
	Stockholders Equity
1.99T	1.92T	1.62T	1.51T	1.31T	910.67B
Cash Flow		Free Cash Flow
213.21B	171.46B	74.41B	76.41B	203.97B	172.67B
	Operating Cash Flow
295.24B	271.23B	152.13B	147.52B	274.91B	261.86B
	Investing Cash Flow
-82.59B	-76.02B	-49.59B	-63.38B	-122.49B	-84.02B
	Financing Cash Flow
-129.25B	-155.51B	-122.79B	-189.62B	1.39B	-91.75B

NEC Technical Analysis

Technical Analysis Sentiment

Positive

Last Price3207.00

Price Trends

50DMA

3046.83

Positive

100DMA

2848.70

Positive

200DMA

2726.12

Positive

Market Momentum

MACD

42.18

Negative

RSI

58.46

Neutral

STOCH

88.90

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 3207 is above the 20-day moving average (MA) of 3062.38, above the 50-day MA of 3046.83, and above the 200-day MA of 2726.12, indicating a bullish trend. The MACD of 42.18 indicates Negative momentum. The RSI at 58.46 is Neutral, neither overbought nor oversold. The STOCH value of 88.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.

NEC Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6758	79 Outperform	¥20.45T	17.92	14.40%	0.53%	9.56%	26.52%
6701	78 Outperform	¥4.38T	22.99	10.13%	0.85%	-0.91%	52.93%
6954	73 Outperform	¥3.20T	23.33		2.66%	-3.52%	-0.04%
6501	71 Outperform	¥15.37T	26.97	10.16%	1.19%	-4.69%	-27.45%
6702	69 Neutral	$5.30T	16.77	19.16%	0.95%	0.40%	152.61%
7751	64 Neutral	¥4.01T	25.07		3.73%	7.87%	-38.59%
Sector *	59 Neutral	$9.97B	10.09	-6.45%	3.08%	7.41%	-11.59%

* Technology Sector Average

Performance Comparison

JP:6701

NEC

3,207.00

1,023.59

46.88%

JP:6954

Fanuc Corporation

3,497.00

-1,020.78

-22.59%

JP:7751

Canon Inc.

4,265.00

-37.58

-0.87%

JP:6501

Hitachi,Ltd.

3,520.00

803.40

29.57%

JP:6758

Sony

3,537.00

984.64

38.58%

JP:6702

Fujitsu

2,941.00

443.87

17.78%

NEC Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: 19.88% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong growth in IT services and social infrastructure, leading to an upward revision of full-year forecasts. Despite challenges in the submarine systems and telecom services segments, the overall business outlook remains positive, supported by robust domestic IT services bookings and surging Blue Stellar sales.

Highlights

Revenue and Operating Profit Increase

Revenue for Q3 FY ending March 2025 was ¥2312.8 billion, with non-GAAP operating profit (OP) at ¥162.3 billion, representing a 4.5% year-on-year increase and a ¥75.9 billion improvement in marginal profit.

IT Services and Social Infrastructure Growth

Domestic IT services revenue increased 7% and international DGDF business rose 8%. Adjusted operating profit in IT services improved significantly due to increased profitability and higher revenue projects.

Upward Revision of Full Year Forecasts

Non-GAAP OP forecast revised to ¥280 billion, a ¥25 billion increase from the previous forecast. Revenue forecast updated by ¥40 billion to ¥3,410 billion.

Strong Domestic IT Services Bookings

Overall domestic IT services increased 9% year-on-year, with a 36% increase in public services orders driven by municipal government's platform standardization projects.

Blue Stellar Sales Surge

Blue Stellar sales increased by 26% year-on-year, surpassing the annual plan, driven by demand from local governments and government cloud operation support services.

Lowlights

Submarine Systems Cost Increase

Costs have increased due to schedule delays in multiple existing projects, affecting profit margins for the submarine systems segment.

Telecom Services Risk

Telecom Services reflects possible risks of not achieving targets for 5G and submarine systems, impacting revenue and adjusted operating profit.

Company Guidance

In the recent financial call, the company provided detailed guidance on various metrics for the fiscal year ending March 2025. The third quarter results showed a notable performance with revenue reaching ¥2312.8 billion and non-GAAP operating profit (OP) at ¥162.3 billion, significantly surpassing expectations. This led to an upward revision of the full-year forecast, with non-GAAP OP adjusted from ¥255 billion to ¥280 billion, reflecting an increase of ¥25 billion. The domestic IT services sector saw a 7% revenue increase, while international DGDF business rose by 8%. The manufacturing sector reported a 13% increase, driven by digital transformation projects. The social infrastructure segment, despite facing a revenue reduction, plans to update adjusted OP to ¥95 billion, accounting for challenges in 5G and submarine systems. The company also announced a share split to enhance investment accessibility, and Blue Stellar's nine-month sales surged by 26%, exceeding annual expectations.

NEC Corporate Events

NEC Corporation Transfers SME Business to Subsidiary for Strategic Reorganization

Apr 22, 2025

NEC Corporation has announced a strategic move to transfer its SME business to its wholly-owned subsidiary, NEC Nexsolutions, Ltd., through a simplified absorption-type corporate split. This reorganization aims to strengthen NEC’s business foundation in the digital transformation and social infrastructure domains, enhancing decision-making and operational efficiency.

NEC Corporation Announces Strategic Share Split to Enhance Market Liquidity

Jan 30, 2025

NEC Corporation announced a share split aimed at improving the liquidity of its shares and expanding its investor base. The split will occur on March 31, 2025, at a ratio of five new shares for every existing share, significantly increasing the total number of shares issued. This move is accompanied by amendments to the Articles of Incorporation to reflect the increased number of authorized shares. The share split and amendments are expected to positively impact NEC’s market presence by making its shares more accessible to a broader range of investors.

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.