Nippon RietecLtd (TSE:1938) capped FY 2026 with fourth quarter revenue of ¥25.6b and basic EPS of ¥121.27, alongside trailing twelve month revenue of ¥74.0b and EPS of ¥224.11 that reflect the latest run rate. Over recent periods, the company has seen quarterly revenue move from ¥24.8b and EPS of ¥125.25 in FY 2025 Q4 to ¥19.9b and EPS of ¥60.37 in FY 2026 Q3, before the latest step up to FY 2026 Q4 levels. For investors, the key takeaway is how these earnings feed through to margins and what that means for the staying power of the current profitability profile.
See our full analysis for Nippon RietecLtd.
With the headline numbers in place, the next step is to see how this earnings profile lines up against the most widely held narratives around Nippon RietecLtd’s growth, risks, and long term potential.
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TSE:1938 Revenue & Expenses Breakdown as at May 2026 TTM net margin holds at 7.5% Over the trailing 12 months, Nippon RietecLtd converted ¥74,044 million of revenue into ¥5,551 million of net income, which works out to a 7.5% net profit margin compared with 6.9% the previous year. For investors looking for a more bullish narrative, this 7.5% margin sits alongside five year earnings growth of 21.8% a year and one year growth of 17.3%. At the same time, the P/E of 13.7x is still slightly below the broader Japan market at 14.5x, which supports the view that the market is not overpaying for the recent margin profile.
Supporters can point to trailing EPS of ¥224.11 and revenue of about ¥74.0b as evidence that recent profitability is not just a single quarter spike. The step from a 6.9% to 7.5% margin also suggests the business has recently kept more of each yen of sales as profit without the P/E pushing far above the market average.
Strong recent profit conversion and multi year earnings growth make this an easy company to keep on your radar if you want to understand how the story develops from here, and the community view is a good way to track that over time. Curious how numbers become stories that shape markets? Explore Community Narratives.
P/E of 13.7x versus sector and peers On valuation, the stock trades at ¥3,065 per share, which works out to a 13.7x P/E that sits below the Japan market average of 14.5x, below the peer average of 31.9x, and a little above the Japan Construction industry at 12.5x. Critics who take a more cautious, quasi bearish stance often point to the gap between the share price and DCF fair value of ¥1,175.27, and that tension shows up clearly here because investors are paying nearly 2.6x the DCF fair value while the P/E screens as cheaper than many peers.
That combination means the stock looks inexpensive relative to other companies on earnings, but expensive when you compare ¥3,065 to the DCF fair value of ¥1,175.27. For you as a shareholder or potential buyer, the key question is whether the multi year earnings growth of 21.8% a year justifies paying above the DCF fair value even though the headline P/E is not stretched against the wider market. Dividend yield 2.68% but weak cash flow cover Income focused investors are currently looking at a 2.68% dividend yield, and the latest analysis flags that this payout is not well covered by free cash flow even though earnings themselves have grown 17.3% over the last year. For a more cautious narrative, it is important to note that the same period that delivered ¥5,551 million of net income and a 7.5% margin also comes with this weaker free cash flow coverage on the dividend, so the cash actually coming in may limit how comfortably the company can fund distributions if conditions change.
This tension between growing earnings and tighter free cash flow coverage means an investor relying mainly on the 2.68% yield needs to keep a close eye on future cash generation, not just EPS. Even with trailing results described as high quality and multi year earnings growth of 21.8% a year, the flagged cash flow coverage issue is a concrete reminder that dividends depend on cash, not just accounting profit. Next Steps
Don’t just look at this quarter; the real story is in the long-term trend. We’ve done an in-depth analysis on Nippon RietecLtd’s growth and its valuation to see if today’s price is a bargain. Add the company to your watchlist or portfolio now so you don’t miss the next big move.
Seeing both the risks and rewards side by side can feel like a lot to weigh up. Move quickly from headline impressions to the underlying data and reach your own view with the help of 2 key rewards and 1 important warning sign
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The company’s 2.68% dividend with weak free cash flow cover and a share price trading well above DCF fair value highlight pressure on both income and valuation support.
If that mix makes you cautious, use the 12 high quality undervalued stocks to quickly spot companies where cash backing and pricing look tighter before the next opportunity moves away.
This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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