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Keyence Corp 6861

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Stock XTKS Rating as of
JPY 69,360.00 +140.00 (0.20%)
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As of Delayed Price Closed
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Company Report

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Keyence Earnings: Record Gross Margin From Value-Added Solutions Amid Macro Headwinds

Jason Kondo

Keyence's stronger-than-expected March-quarter results were greeted positively by the market, as the firm not only realized 8% year-on-year revenue growth despite macro headwinds, but also a record gross margin of 83.7%. Keyence has been offering solutions that add value in the current downcycle through new products, such as a wide area scanner that can replace inspectors to measure large components as well as radar level sensors that conserve energy. While we slightly cut our revenue estimate for fiscal 2024 (ending March 2025) after reflecting delayed investments in Asia, our medium-term growth of about 12% CAGR between fiscal 2024 and 2028 is intact. Therefore, we maintain our fair value estimate of Keyence at JPY 63,000. Despite our top-line growth projection above its factory automation peers, we think the market is overestimating its prospects.

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Price vs Fair Value

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6861 is trading at a 10% premium.
Price
JPY 69,359.98
Fair Value
JPY 92,792.00
Uncertainty
Medium
1-Star Price
JPY 33,463.00
5-Star Price
JPY 28,241.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Machine vision/sensors address secular issues like energy savings, product quality control, and labor shortages, thus will lead to stronger growth than other factory automation equipment.

Bears

The machine vision and sensors market is fragmented and subject to threats of technology replication and pricing pressures over the long term.

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Trading Information

Previous Close Price
JPY 69,220.00
Day Range
JPY 68,770.00–69,760.00
52-Week Range
JPY 52,080.00–75,040.00
Bid/Ask
JPY 69,350.00 / JPY 69,430.00
Market Cap
JPY 16.82 Tril
Volume/Avg
460,200 / 610,395

Key Statistics

Price/Earnings (Normalized)
46.48
Price/Sales
17.36
Dividend Yield (Trailing)
0.43%
Dividend Yield (Forward)
0.43%
Total Yield
0.43%

Company Profile

Keyence develops and sells factory automation products, including sensors, machine vision systems, barcode readers, programmable logic controllers, laser markers, measuring instruments, and digital microscopes. The company has a fabless business model where manufacturing of its products is outsourced to qualified contract manufacturing companies, while it focuses on product planning and development. It serves customers in various industries, such as automotive, metals/machining, semiconductor/electronics, food, pharmaceutical, and other industries. Keyence was founded in 1972 and is headquartered in Osaka, Japan.
Sector
Technology
Industry
Scientific & Technical Instruments
Stock Style Box
Large Growth
Total Number of Employees
10,580
Website
http://www.keyence.co.jp

Competitors

Valuation

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Metric
6861
6954
6324
Price/Earnings (Normalized)
 46.4831.10197.00
Price/Book Value
 5.982.573.56
Price/Sales
 17.365.526.29
Price/Cash Flow
 44.6426.9627.02
Price/Earnings
6861
6954
6324

Financial Strength

Metric
6861
6954
6324
Quick Ratio
 11.714.272.71
Current Ratio
 12.647.004.23
Interest Coverage
 ——18.46
Quick Ratio
6861
6954
6324

Profitability

Metric
6861
6954
6324
Return on Assets (Normalized)
 18.97%10.07%2.05%
Return on Equity (Normalized)
 19.95%11.58%3.01%
Return on Invested Capital (Normalized)
 19.83%11.20%2.33%
Return on Assets
6861
6954
6324
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