# Denka Company (4061.JP)

Canonical: https://gigainvestors.com/s/4061.JP

Analysis as of: 2026-10-15T07:10:08.995Z. Financial observations: FY2014–FY2026.

Listing currency: JPY. Reporting currency: JPY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: JPY 3,018.00 per share; close as of 2026-10-15.

## Checklist

### understandable: pass

- 5 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 5

- Years with a net loss: 1

- Operating margin variation: 0.30×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.07×

- FY2018: 0.09×

- FY2019: 0.08×

- FY2020: 0.08×

- FY2021: 0.10×

- FY2022: 0.10×

- FY2023: 0.08×

- FY2024: 0.03×

- FY2025: 0.04×

- FY2026: 0.07×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 6.8%

- ROIC, second-lowest year: 2.5%

- Typical minus recent gross margin: 3.7 pp

- Typical gross margin (annual median): 24.9%

- Recent gross margin (lower of latest and 3-year median): 21.2%

- Years with nonpositive capital: 0

- Capital spending / revenue: 9.8%

- ROIC including acquisitions, ten-year median: 2.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 6.4%

- FY2018: 8.2%

- FY2019: 7.8%

- FY2020: 7.0%

- FY2021: 7.1%

- FY2022: 7.2%

- FY2023: 6.6%

- FY2024: 2.5%

- FY2025: 2.4%

- FY2026: 3.4%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- working capital as a share of revenue rose more than 10pp and ends positive

- Owner earnings / net income, 5-yr: -0.49×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: JPY -27B

- Net income, five-year total: JPY 54B

- Return on incremental invested capital: -2.9%

- Working capital / revenue, annual change: 2.2 pp

- Working capital / revenue, change between three-year averages: 15.5 pp

- Working capital / revenue, final three-year average: 43.2%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: -0.52×

- FY2025: 2.97×

- FY2026: -1.45×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 7.8% vs 2.5%

- Per-share earnings: 214.71 to 138.61 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.5%

- Ordinary dilution, 5-year annual growth: -0.0%

- Market cap gain: JPY 49B

- Cumulative retained earnings: JPY 50B

- Diluted shares, 10-year annual growth: -0.5%

- Diluted shares, 5-year annual growth: -0.0%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: -5.3%

- Per-share value change: JPY -76.10

- Per-share value, starting three-year median: JPY 214.71

- Per-share value, ending three-year median: JPY 138.61

- Buybacks concentrated in cheaper years (correlation): 0.77

- Average buyback yield: 0.4%

- Buyback history: 10 years

- Debt-funded buybacks: No

- Acquisition spending: JPY 6.1B

- Cumulative net income, 10 years: JPY 166B

- ROIC, first three-year median: 7.8%

- ROIC, last three-year median: 2.5%

Chart: Earnings per share; fiscal year observations.

- FY2017: JPY 205.05

- FY2018: JPY 261.80

- FY2019: JPY 286.18

- FY2020: JPY 262.62

- FY2021: JPY 264.24

- FY2022: JPY 301.67

- FY2023: JPY 148.08

- FY2024: JPY 138.61

- FY2025: JPY -142.73

- FY2026: JPY 182.10

### accounting: pass

- Sloan accruals: -3.0%

- Receivables to sales index (DSRI): 1.04×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 2.30×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.02×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -4.7%

- FY2018: -5.4%

- FY2019: -1.6%

- FY2020: -3.8%

- FY2021: -3.4%

- FY2022: -3.0%

- FY2023: 0.6%

- FY2024: -3.9%

- FY2025: -4.7%

- FY2026: -3.0%

## Holders

## Price story

Down 33% since May 2026 · sales -4%

Story as of 2026-10-16T10:00:14.103Z; price observation 2026-10-15.

### Sales · FY2025–2026

sales -4%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf; observed 2026-06-17.

- FY2017: JPY 363B 

- FY2018: JPY 396B 

- FY2019: JPY 413B 

- FY2020: JPY 381B 

- FY2021: JPY 354B 

- FY2022: JPY 385B 

- FY2023: JPY 408B 

- FY2024: JPY 389B 

- FY2025: JPY 400B 

- FY2026: JPY 384B 

### Gross margin · FY2026

gross margin 24.5%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf; observed 2026-06-17.

- FY2017: 24.6% 

- FY2018: 25.3% 

- FY2019: 24.8% 

- FY2020: 26.1% 

- FY2021: 28.3% 

- FY2022: 27.8% 

- FY2023: 25.1% 

- FY2024: 21.2% 

- FY2025: 21.1% 

- FY2026: 24.5% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Annual sales are JPY 384.2 billion.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf (filed 2026-06-17); FY2026: revenue 384247000000; grossProfit 94256000000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 21.1% to 24.5% during 2024–26; it earns 6.8% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2024: grossProfit / revenue = 21.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2025: grossProfit / revenue = 21.1%.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf (filed 2026-06-17); FY2026: grossProfit / revenue = 24.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); 10-year return on capital observations [[2017,0.0637219321591977],[2018,0.08159588592702699],[2019,0.07822999338720311],[2020,0.07043936424789575],[2021,0.07078607075798693],[2022,0.07243193825583562],[2023,0.0656412781618059],[2024,0.02485797070833163],[2025,0.02387814591201827],[2026,0.03444340945553297]]; median 0.06804032120485082. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid no dividends in 10 years; bought back JPY 6 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2017: growth capex 0; upkeep 22583000000; owner earnings 19609000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2018: growth capex 1509000000; upkeep 23860000000; owner earnings 23035000000. Growth capex / owner earnings = 0.06550900803125678.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2019: growth capex 5024000000; upkeep 22434000000; owner earnings 25046000000. Growth capex / owner earnings = 0.2005909127205941.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2020: growth capex 0; upkeep 33839000000; owner earnings 10836000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2021: growth capex 0; upkeep 37494000000; owner earnings 7709000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2022: growth capex 14595000000; upkeep 23359000000; owner earnings 26012000000. Growth capex / owner earnings = 0.5610871905274488.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); FY2023: growth capex 13286000000; upkeep 26554000000; owner earnings 12768000000. Growth capex / owner earnings = 1.0405701754385965.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); Dividend observations: [[2017,0],[2018,0],[2019,0],[2020,0],[2021,0],[2022,0],[2023,0],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf (filed 2026-06-17); FY2026: cash repurchases 6000000 JPY.

### What the price says

The price is 0.7 times annual sales; cash earnings are negative.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-17); Closing price 3018 JPY; reporting-to-trading FX 1; FY2026 annual sales per share 4458.195520866518; price multiple 0.6769555049513409. FY2026 cash earnings/share -264.47719018795794. Closing-price date 2026-10-15.

## Monthly share-price history (JPY per share)

- 2016-11: JPY 2,525.00 per share

- 2016-12: JPY 2,580.00 per share

- 2017-01: JPY 2,780.00 per share

- 2017-02: JPY 2,925.00 per share

- 2017-03: JPY 2,890.00 per share

- 2017-04: JPY 2,870.00 per share

- 2017-05: JPY 2,785.00 per share

- 2017-06: JPY 2,895.00 per share

- 2017-07: JPY 3,075.00 per share

- 2017-08: JPY 3,495.00 per share

- 2017-09: JPY 3,705.00 per share

- 2017-10: JPY 3,765.00 per share

- 2017-11: JPY 4,130.00 per share

- 2017-12: JPY 4,515.00 per share

- 2018-01: JPY 4,345.00 per share

- 2018-02: JPY 3,970.00 per share

- 2018-03: JPY 3,565.00 per share

- 2018-04: JPY 3,910.00 per share

- 2018-05: JPY 3,995.00 per share

- 2018-06: JPY 3,695.00 per share

- 2018-07: JPY 3,835.00 per share

- 2018-08: JPY 3,805.00 per share

- 2018-09: JPY 3,960.00 per share

- 2018-10: JPY 3,680.00 per share

- 2018-11: JPY 3,660.00 per share

- 2018-12: JPY 3,110.00 per share

- 2019-01: JPY 3,490.00 per share

- 2019-02: JPY 3,355.00 per share

- 2019-03: JPY 3,190.00 per share

- 2019-04: JPY 3,340.00 per share

- 2019-05: JPY 3,110.00 per share

- 2019-06: JPY 3,195.00 per share

- 2019-07: JPY 3,155.00 per share

- 2019-08: JPY 2,771.00 per share

- 2019-09: JPY 2,971.00 per share

- 2019-10: JPY 3,155.00 per share

- 2019-11: JPY 3,260.00 per share

- 2019-12: JPY 3,270.00 per share

- 2020-01: JPY 3,010.00 per share

- 2020-02: JPY 2,728.00 per share

- 2020-03: JPY 2,277.00 per share

- 2020-04: JPY 2,599.00 per share

- 2020-05: JPY 2,639.00 per share

- 2020-06: JPY 2,637.00 per share

- 2020-07: JPY 2,514.00 per share

- 2020-08: JPY 2,982.00 per share

- 2020-09: JPY 3,195.00 per share

- 2020-10: JPY 3,200.00 per share

- 2020-11: JPY 3,230.00 per share

- 2020-12: JPY 4,030.00 per share

- 2021-01: JPY 3,980.00 per share

- 2021-02: JPY 4,000.00 per share

- 2021-03: JPY 4,420.00 per share

- 2021-04: JPY 4,285.00 per share

- 2021-05: JPY 4,060.00 per share

- 2021-06: JPY 3,695.00 per share

- 2021-07: JPY 3,780.00 per share

- 2021-08: JPY 3,860.00 per share

- 2021-09: JPY 3,930.00 per share

- 2021-10: JPY 3,730.00 per share

- 2021-11: JPY 3,345.00 per share

- 2021-12: JPY 3,760.00 per share

- 2022-01: JPY 4,010.00 per share

- 2022-02: JPY 3,530.00 per share

- 2022-03: JPY 3,400.00 per share

- 2022-04: JPY 3,480.00 per share

- 2022-05: JPY 3,195.00 per share

- 2022-06: JPY 3,285.00 per share

- 2022-07: JPY 3,435.00 per share

- 2022-08: JPY 3,345.00 per share

- 2022-09: JPY 3,175.00 per share

- 2022-10: JPY 3,445.00 per share

- 2022-11: JPY 3,310.00 per share

- 2022-12: JPY 3,025.00 per share

- 2023-01: JPY 2,686.00 per share

- 2023-02: JPY 2,875.00 per share

- 2023-03: JPY 2,735.00 per share

- 2023-04: JPY 2,713.00 per share

- 2023-05: JPY 2,563.00 per share

- 2023-06: JPY 2,712.50 per share

- 2023-07: JPY 2,805.50 per share

- 2023-08: JPY 2,747.50 per share

- 2023-09: JPY 2,703.00 per share

- 2023-10: JPY 2,713.50 per share

- 2023-11: JPY 2,645.00 per share

- 2023-12: JPY 2,496.00 per share

- 2024-01: JPY 2,582.00 per share

- 2024-02: JPY 2,456.00 per share

- 2024-03: JPY 2,348.50 per share

- 2024-04: JPY 2,338.50 per share

- 2024-05: JPY 2,219.50 per share

- 2024-06: JPY 2,163.50 per share

- 2024-07: JPY 2,196.50 per share

- 2024-08: JPY 2,264.50 per share

- 2024-09: JPY 2,252.50 per share

- 2024-10: JPY 2,165.00 per share

- 2024-11: JPY 2,121.00 per share

- 2024-12: JPY 2,231.50 per share

- 2025-01: JPY 2,212.50 per share

- 2025-02: JPY 2,077.50 per share

- 2025-03: JPY 2,137.50 per share

- 2025-04: JPY 1,946.50 per share

- 2025-05: JPY 2,056.50 per share

- 2025-06: JPY 1,980.00 per share

- 2025-07: JPY 2,130.50 per share

- 2025-08: JPY 2,243.50 per share

- 2025-09: JPY 2,283.50 per share

- 2025-10: JPY 2,239.50 per share

- 2025-11: JPY 2,735.50 per share

- 2025-12: JPY 2,743.50 per share

- 2026-01: JPY 2,969.50 per share

- 2026-02: JPY 3,679.00 per share

- 2026-03: JPY 3,531.00 per share

- 2026-04: JPY 4,100.00 per share

- 2026-05: JPY 4,477.00 per share

- 2026-06: JPY 4,336.00 per share

- 2026-07: JPY 3,430.00 per share

- 2026-08: JPY 3,365.00 per share

- 2026-09: JPY 3,285.00 per share

- 2026-10: JPY 3,204.00 per share

## Annual estimated value (JPY per share)

- FY2020: low JPY 3,052.69 per share, central JPY 3,439.21 per share, high JPY 3,953.74 per share

- FY2021: low JPY 2,647.32 per share, central JPY 2,982.23 per share, high JPY 3,428.06 per share

- FY2022: low JPY 2,985.51 per share, central JPY 3,377.14 per share, high JPY 3,898.48 per share

- FY2023: low JPY 1,758.28 per share, central JPY 1,981.44 per share, high JPY 2,278.52 per share

- FY2024: low JPY 1,769.61 per share, central JPY 2,024.80 per share, high JPY 2,303.33 per share

- FY2025: low JPY 1,472.72 per share, central JPY 1,668.83 per share, high JPY 1,886.29 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original EDINET filing](https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCU0.pdf); period 2026-03-31, filed 2026-06-17.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.

## Reported holder observations