# The Japan Steel Works (5631.JP)

Canonical: https://gigainvestors.com/s/5631.JP

Analysis as of: 2026-10-15T07:10:40.441Z. Financial observations: FY2013–FY2026.

Listing currency: JPY. Reporting currency: JPY.

## Verdict

Not a wonderful business

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

Share price: JPY 6,406.00 per share; close as of 2026-10-15.

Estimated value: low JPY 3,160.62 per share, central JPY 3,608.26 per share, high JPY 4,041.46 per share. Buy at or below the central value JPY 3,608.26 per share. Valuation as of 2026-10-15T07:10:40.441Z; scenarios are not confidence intervals.

Expected annual return: 6.4% at the stated quote. About 6.4% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; JP 10-year bond 2.9% + 4 points).

## 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: 0.23×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.06×

- FY2018: 0.10×

- FY2019: 0.11×

- FY2020: 0.09×

- FY2021: 0.05×

- FY2022: 0.07×

- FY2023: 0.06×

- FY2024: 0.07×

- FY2025: 0.09×

- FY2026: 0.09×

### moat: fail

- ROIC median below threshold

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

- ROIC, median of available years: 11.0%

- ROIC, second-lowest year: 7.9%

- Typical minus recent gross margin: -0.6 pp

- Typical gross margin (annual median): 22.8%

- Recent gross margin (lower of latest and 3-year median): 23.4%

- Years with nonpositive capital: 0

- Capital spending / revenue: 4.1%

- ROIC including acquisitions, ten-year median: 7.2%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 10.1%

- FY2018: 17.0%

- FY2019: 15.9%

- FY2020: 12.0%

- FY2021: 6.2%

- FY2022: 11.0%

- FY2023: 7.9%

- FY2024: 11.1%

- FY2025: 11.1%

- FY2026: 7.9%

### 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: 0.77×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: JPY 59B

- Net income, five-year total: JPY 77B

- Return on incremental invested capital: 3.9%

- Working capital / revenue, annual change: 4.2 pp

- Working capital / revenue, change between three-year averages: 28.0 pp

- Working capital / revenue, final three-year average: 60.2%

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

- FY2022: 0.97×

- FY2023: 1.01×

- FY2024: 0.97×

- FY2025: 0.57×

- FY2026: 0.51×

### management: pass

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

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 15.9% vs 11.1%

- Per-share earnings: -67.61 to 244.03 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 0.0%

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

- Market cap gain: JPY 484B

- Cumulative retained earnings: JPY 89B

- Diluted shares, 10-year annual growth: 0.0%

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

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: JPY 311.64

- Per-share value, starting three-year median: JPY -67.61

- Per-share value, ending three-year median: JPY 244.03

- Buybacks concentrated in cheaper years (correlation): -1.00

- Average buyback yield: 0.0%

- Buyback history: 3 years

- Debt-funded buybacks: Yes

- Acquisition spending: JPY 3.5B

- Cumulative net income, 10 years: JPY 119B

- ROIC, first three-year median: 15.9%

- ROIC, last three-year median: 11.1%

Chart: Earnings per share; fiscal year observations.

- FY2017: JPY -67.61

- FY2018: JPY 145.77

- FY2019: JPY 271.69

- FY2020: JPY 126.66

- FY2021: JPY 93.76

- FY2022: JPY 189.63

- FY2023: JPY 162.75

- FY2024: JPY 194.02

- FY2025: JPY 244.03

- FY2026: JPY 261.38

### accounting: fail

- earnings not backed by cash

- Sloan accruals: 8.4%

- Receivables to sales index (DSRI): 0.96×

- Restructuring years, last five: 0

- Earnings backed by cash: No

- Operating cash / earnings: -0.88×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.02×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -6.2%

- FY2018: -5.4%

- FY2019: 6.2%

- FY2020: -3.2%

- FY2021: -2.5%

- FY2022: -2.5%

- FY2023: 3.7%

- FY2024: -2.0%

- FY2025: 5.7%

- FY2026: 8.4%

## Holders

## Price story

Down 37% since Feb 2026 · sales +10.6%

Story as of 2026-10-16T10:00:14.370Z; price observation 2026-10-15.

Price needs cash profits to grow 11.5% a year for ten years

### Sales · FY2025–2026

sales +10.6%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf; observed 2026-06-19.

- FY2017: JPY 212B 

- FY2018: JPY 212B 

- FY2019: JPY 220B 

- FY2020: JPY 218B 

- FY2021: JPY 198B 

- FY2022: JPY 214B 

- FY2023: JPY 239B 

- FY2024: JPY 253B 

- FY2025: JPY 249B 

- FY2026: JPY 275B 

### Gross margin · FY2026

gross margin 23.4%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf; observed 2026-06-19.

- FY2017: 19.7% 

- FY2018: 23.0% 

- FY2019: 24.3% 

- FY2020: 23.1% 

- FY2021: 21.4% 

- FY2022: 22.4% 

- FY2023: 20.7% 

- FY2024: 22.5% 

- FY2025: 24.5% 

- FY2026: 23.4% 

## Owner memo

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

### How it makes money

Annual sales are JPY 274.9 billion.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf (filed 2026-06-19); FY2026: revenue 274852000000; grossProfit 64259000000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 22.5% to 24.5% during 2024–26; it earns 11% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2024: grossProfit / revenue = 22.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2025: grossProfit / revenue = 24.5%.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf (filed 2026-06-19); FY2026: grossProfit / revenue = 23.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); 10-year return on capital observations [[2017,0.10064005946358888],[2018,0.17024372831036028],[2019,0.15881374952870742],[2020,0.11957572039144217],[2021,0.06196824627317901],[2022,0.11031451812746142],[2023,0.07886485918084789],[2024,0.11132545927570704],[2025,0.11052538805240962],[2026,0.07900117042201571]]; median 0.11041995308993552. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 22% gross margin through 2022 cost inflation.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf (filed 2026-06-19); Gross margin observations: [[2021,0.2135062941512111],[2022,0.2236587305299593],[2023,0.20685235065201638]]; range within 2 percentage points.

### Where the cash goes

Spends 57.2% of cash earnings on expansion; earns 3.9% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2018: growth capex 0; upkeep 6549000000; owner earnings 7639000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2019: growth capex 1445497747.075901; upkeep 5901502252.924099; owner earnings 17938497747.0759. Growth capex / owner earnings = 0.08058075806885931.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2020: growth capex 0; upkeep 12824000000; owner earnings 1482000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2021: growth capex 0; upkeep 8276000000; owner earnings 4167000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2022: growth capex 2622000000; upkeep 6183000000; owner earnings 13535000000. Growth capex / owner earnings = 0.19371998522349465.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2023: growth capex 0; upkeep 6107000000; owner earnings 12064000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2024: growth capex 2121000000; upkeep 7743000000; owner earnings 13839000000. Growth capex / owner earnings = 0.15326251896813353.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); FY2025: growth capex 0; upkeep 15110000000; owner earnings 10300000000. Growth capex / owner earnings = 0.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100Y7BQ.pdf (filed 2026-06-19); FY2026: growth capex 5561903480.679291; upkeep 18131096519.32071; owner earnings 9718903480.67929. Growth capex / owner earnings = 0.5722768511628997.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); Incremental return on capital 0.0391897973397977, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); Dividend observations: [[2017,1837000000],[2018,2204000000],[2019,3307000000],[2020,4227000000],[2021,2573000000],[2022,2942000000],[2023,4672000000],[2024,4268000000],[2025,5004000000],[2026,6771000000]]. Zero only counted when supported by a complete cash-flow statement.

### What the price says

The price assumes cash profits grow 11.5% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-19); Ten-year compound average after fade. Initial solved rate 0.1519933410753922. Price 6406; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share -227.04320602409638 → FY2026 132.04049024273368. Closing-price date 2026-10-15.

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

- 2016-11: JPY 2,033.00 per share

- 2016-12: JPY 2,072.00 per share

- 2017-01: JPY 2,124.00 per share

- 2017-02: JPY 2,007.00 per share

- 2017-03: JPY 1,794.00 per share

- 2017-04: JPY 1,788.00 per share

- 2017-05: JPY 1,606.00 per share

- 2017-06: JPY 1,758.00 per share

- 2017-07: JPY 1,825.00 per share

- 2017-08: JPY 2,233.00 per share

- 2017-09: JPY 2,590.00 per share

- 2017-10: JPY 2,865.00 per share

- 2017-11: JPY 3,600.00 per share

- 2017-12: JPY 3,625.00 per share

- 2018-01: JPY 3,405.00 per share

- 2018-02: JPY 3,320.00 per share

- 2018-03: JPY 3,395.00 per share

- 2018-04: JPY 3,600.00 per share

- 2018-05: JPY 3,070.00 per share

- 2018-06: JPY 2,795.00 per share

- 2018-07: JPY 2,738.00 per share

- 2018-08: JPY 2,845.00 per share

- 2018-09: JPY 2,766.00 per share

- 2018-10: JPY 2,395.00 per share

- 2018-11: JPY 2,074.00 per share

- 2018-12: JPY 1,771.00 per share

- 2019-01: JPY 2,006.00 per share

- 2019-02: JPY 2,007.00 per share

- 2019-03: JPY 2,039.00 per share

- 2019-04: JPY 2,136.00 per share

- 2019-05: JPY 1,650.00 per share

- 2019-06: JPY 1,799.00 per share

- 2019-07: JPY 1,907.00 per share

- 2019-08: JPY 1,893.00 per share

- 2019-09: JPY 2,076.00 per share

- 2019-10: JPY 2,315.00 per share

- 2019-11: JPY 2,259.00 per share

- 2019-12: JPY 2,157.00 per share

- 2020-01: JPY 1,999.00 per share

- 2020-02: JPY 1,575.00 per share

- 2020-03: JPY 1,308.00 per share

- 2020-04: JPY 1,333.00 per share

- 2020-05: JPY 1,590.00 per share

- 2020-06: JPY 1,531.00 per share

- 2020-07: JPY 1,488.00 per share

- 2020-08: JPY 1,530.00 per share

- 2020-09: JPY 1,840.00 per share

- 2020-10: JPY 2,219.00 per share

- 2020-11: JPY 2,550.00 per share

- 2020-12: JPY 3,075.00 per share

- 2021-01: JPY 2,898.00 per share

- 2021-02: JPY 2,720.00 per share

- 2021-03: JPY 2,627.00 per share

- 2021-04: JPY 2,652.00 per share

- 2021-05: JPY 2,842.00 per share

- 2021-06: JPY 2,854.00 per share

- 2021-07: JPY 2,676.00 per share

- 2021-08: JPY 2,602.00 per share

- 2021-09: JPY 2,917.00 per share

- 2021-10: JPY 3,335.00 per share

- 2021-11: JPY 3,425.00 per share

- 2021-12: JPY 3,860.00 per share

- 2022-01: JPY 3,775.00 per share

- 2022-02: JPY 3,730.00 per share

- 2022-03: JPY 3,820.00 per share

- 2022-04: JPY 3,680.00 per share

- 2022-05: JPY 3,235.00 per share

- 2022-06: JPY 2,948.00 per share

- 2022-07: JPY 3,065.00 per share

- 2022-08: JPY 2,993.00 per share

- 2022-09: JPY 2,846.00 per share

- 2022-10: JPY 3,075.00 per share

- 2022-11: JPY 2,920.00 per share

- 2022-12: JPY 2,609.00 per share

- 2023-01: JPY 2,749.00 per share

- 2023-02: JPY 2,559.00 per share

- 2023-03: JPY 2,479.00 per share

- 2023-04: JPY 2,457.00 per share

- 2023-05: JPY 2,867.00 per share

- 2023-06: JPY 3,076.00 per share

- 2023-07: JPY 2,955.00 per share

- 2023-08: JPY 2,950.00 per share

- 2023-09: JPY 2,777.00 per share

- 2023-10: JPY 2,423.00 per share

- 2023-11: JPY 2,553.50 per share

- 2023-12: JPY 2,450.00 per share

- 2024-01: JPY 2,451.00 per share

- 2024-02: JPY 2,727.50 per share

- 2024-03: JPY 3,393.00 per share

- 2024-04: JPY 3,850.00 per share

- 2024-05: JPY 4,731.00 per share

- 2024-06: JPY 4,283.00 per share

- 2024-07: JPY 4,300.00 per share

- 2024-08: JPY 4,538.00 per share

- 2024-09: JPY 5,024.00 per share

- 2024-10: JPY 5,266.00 per share

- 2024-11: JPY 6,421.00 per share

- 2024-12: JPY 5,778.00 per share

- 2025-01: JPY 5,522.00 per share

- 2025-02: JPY 4,975.00 per share

- 2025-03: JPY 5,236.00 per share

- 2025-04: JPY 5,876.00 per share

- 2025-05: JPY 6,859.00 per share

- 2025-06: JPY 8,271.00 per share

- 2025-07: JPY 9,421.00 per share

- 2025-08: JPY 8,994.00 per share

- 2025-09: JPY 9,000.00 per share

- 2025-10: JPY 10,140.00 per share

- 2025-11: JPY 9,235.00 per share

- 2025-12: JPY 7,679.00 per share

- 2026-01: JPY 8,535.00 per share

- 2026-02: JPY 10,220.00 per share

- 2026-03: JPY 8,371.00 per share

- 2026-04: JPY 9,489.00 per share

- 2026-05: JPY 7,669.00 per share

- 2026-06: JPY 7,677.00 per share

- 2026-07: JPY 7,490.00 per share

- 2026-08: JPY 7,380.00 per share

- 2026-09: JPY 7,293.00 per share

- 2026-10: JPY 6,869.00 per share

## Annual estimated value (JPY per share)

- FY2020: low JPY 1,188.69 per share, central JPY 1,219.07 per share, high JPY 1,259.52 per share

- FY2021: low JPY 1,782.25 per share, central JPY 1,867.67 per share, high JPY 1,981.38 per share

- FY2022: low JPY 2,532.62 per share, central JPY 2,690.68 per share, high JPY 2,901.09 per share

- FY2023: low JPY 2,956.93 per share, central JPY 3,263.07 per share, high JPY 3,611.94 per share

- FY2024: low JPY 3,316.47 per share, central JPY 3,813.03 per share, high JPY 4,239.01 per share

- FY2025: low JPY 2,962.87 per share, central JPY 3,410.49 per share, high JPY 3,816.33 per share

- FY2026: low JPY 3,160.62 per share, central JPY 3,608.26 per share, high JPY 4,041.46 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/S100Y7BQ.pdf); period 2026-03-31, filed 2026-06-19.

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.