Quants Research Institute Holdings (TSE:9552) Margin Compression Challenges Bullish Growth Narratives

Quants Research Institute Holdings (TSE:9552) just wrapped up FY 2025 with fourth quarter revenue of ¥5.0 billion and basic EPS of ¥15.26, while trailing twelve month figures came in at ¥16.6 billion of revenue and EPS of ¥47.96. Over the past few quarters, the company has seen revenue move from ¥3.9 billion in Q3 FY 2025 to ¥5.0 billion in Q4 FY 2025. Quarterly EPS ranged from ¥5.99 to ¥18.68 as earnings shifted through the year, setting up a mixed backdrop for profitability. With net profit margin sitting at 16.5% for the last 12 months compared with 35% the year before, investors are likely to read these results through a margins lens and focus on how sustainable the current earnings profile looks.

See our full analysis for Quants Research Institute Holdings.

With the numbers on the table, the next step is to see how this earnings profile lines up against the widely followed narratives around growth, profitability and risk for Quants Research Institute Holdings, and where those stories may need to be revised.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Squeezed From 35% To 16.5%

• Net profit margin over the last 12 months was 16.5%, compared with 35% the year before, alongside trailing 12 month net income of ¥2,747 million on revenue of ¥16,602 million.
• Bears often focus on margin pressure, and the move from 35% to 16.5% gives that concern concrete backing, yet:
  • Quarterly net income swung from ¥1,092.6 million in Q1 FY 2025 to ¥343.9 million in Q3 and ¥834.3 million in Q4. This shows that profitability levels shifted quite a bit through the year rather than settling at one new steady point.
  • Over the trailing 12 months, earnings are described as high quality even as margins compressed, so the bearish worry about purely low quality profits is not fully reflected in the data.

0.3% Revenue Growth With Choppy EPS

• Revenue over the past year grew by 0.3%, while quarterly EPS moved from ¥18.68 in Q1 FY 2025 to ¥5.99 in Q3 and ¥15.26 in Q4, and trailing 12 month EPS was ¥47.96 at FY 2025 year end versus ¥98.81 a year earlier.
• What stands out against a more bullish take that focuses on expected mid teens earnings growth is that recent reported numbers are still soft:
  • Trailing 12 month net income fell from ¥5,788 million a year ago to ¥2,747 million at FY 2025 year end, so the past year shows negative earnings growth even though forecasts point to about 15.5% annual earnings growth.
  • Quarterly revenue did rise from ¥3,479.7 million in Q2 to ¥3,938.2 million in Q3 and ¥5,004.9 million in Q4. Bulls pointing to business activity picking up can lean on that trend even if the full year growth rate stayed low at 0.3%.

To see how this mix of modest revenue growth and EPS volatility fits into the broader story for Quants Research Institute Holdings, check out the balanced narrative many investors are watching right now. 📊 Read the full Quants Research Institute Holdings Consensus Narrative.

DCF Fair Value Sits Well Above Price

• The current share price of ¥1,166 sits below a DCF fair value figure of ¥1,939.06, while the trailing P/E of 22.9x is higher than peer and industry averages of 14.6x and 15.8x.
• Supporters who highlight valuation upside get mixed evidence from these numbers:
  • On one hand, the reported gap of about 39.9% between the current price and the DCF fair value aligns with the idea that the stock may be priced below that modelled estimate despite mid teens earnings growth expectations.
  • On the other hand, the 22.9x P/E premium to peers at 14.6x and the broader industry at 15.8x, along with recent margin compression to 16.5%, means the valuation based on reported earnings is not obviously cheap and depends on how much weight an investor gives to the DCF and growth forecasts.

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 Quants Research Institute Holdings'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.

See What Else Is Out There

Quants Research Institute Holdings is working through softer earnings with net profit margin moving from 35% to 16.5% and trailing EPS roughly halving year on year.

If this kind of choppy profitability and modest 0.3% revenue growth leaves you wanting a smoother ride, use our stable growth stocks screener (2146 results) to focus on companies that have a steadier record of expanding sales and earnings through different conditions.

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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