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Baudroieinc (TSE:4413) Stock Faces Margin Compression As Net Profit Margin Declines To 13.4%

Simply Wall St · 1d ago

baudroieinc (TSE:4413) has kicked off Q1 2027 with revenue of ¥5.4 billion and net income of ¥588 million, translating into basic EPS of ¥18.85. Over the past year, the company has reported revenue of ¥3.4 billion in Q1 2026 and ¥5.4 billion in Q1 2027, while basic EPS moved from ¥14.17 to ¥18.85, giving investors a clear look at how the top and bottom lines are tracking ahead of the latest quarterly release. Taken together with the recent margin trends and growth profile, this set of results puts profitability quality and sustainability firmly in focus.

See our full analysis for baudroieinc.

With the latest numbers on the table, the next step is to see how baudroieinc’s reported growth and margins align with the widely held narratives that have been shaping expectations over the past year.

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TSE:4413 Revenue & Expenses Breakdown as at Jul 2026
TSE:4413 Revenue & Expenses Breakdown as at Jul 2026

TTM revenue reaches ¥19.5b

  • On a trailing twelve month basis, baudroieinc has generated ¥19,468.1 million in revenue and ¥2,607.6 million in net income, with basic EPS of ¥83.70, giving you a fuller picture than the single Q1 2027 snapshot.
  • What stands out for a more optimistic, growth focused view is that these trailing totals sit alongside reported earnings growth of 37% over the past year and a 5 year earnings growth rate of about 35.6%. At the same time, the current Q1 revenue of ¥5,407 million is only a portion of that, which reminds you that any bullish story rests on the whole year’s earnings power rather than one quarter alone.
    • Supporters of the growth angle often point to the strong trailing EPS of ¥83.70 and net income of ¥2,607.6 million as evidence that recent profit levels are backed by more than just a one off quarter.
    • At the same time, bears can highlight that even with these higher trailing earnings, the stock trades at a P/E of 38.8x, which is still well above the broader JP IT industry average of 15.7x.

Premium valuation at 38.8x P/E

  • With a share price of ¥3,145 and trailing EPS of ¥83.70, baudroieinc is on a P/E of 38.8x compared with the JP IT industry average of 15.7x and a DCF fair value of ¥1,514.28, so the stock trades at a premium on both earnings and cash flow based metrics.
  • Critics who take a more bearish stance argue that this premium is hard to ignore, because the P/E sits above the industry while the current price is more than double the DCF fair value of ¥1,514.28. This means any disappointment versus the strong 37% earnings growth and roughly 26.6% forecast earnings growth could matter more than usual.
    • The contrast between the ¥3,145 market price and the ¥1,514.28 DCF fair value is often used to question how much of the expected earnings and revenue growth of around 26% to 28% per year is already reflected in the stock.
    • At the same time, the fact that the P/E of 38.8x is below the peer average of 48.9x shows that within its higher growth peer group, valuation is not at the very top end, which slightly softens the most bearish interpretation.
For investors trying to balance this rich multiple against baudroieinc’s growth record and outlook, it can help to see how different valuation models and peer comparisons line up side by side in one place, so you can judge whether the current pricing still fits your own risk and return expectations through the Curious how numbers become stories that shape markets? Explore Community Narratives.

Margins slip to 13.4% on TTM basis

  • Over the last twelve months, baudroieinc has recorded a net profit margin of 13.4%, which is lower than the 15% margin reported a year earlier, even though revenue and earnings have both grown over that period.
  • What is interesting for a bullish versus bearish debate is that strong reported earnings growth of 37% and forecasts for roughly 26.6% annual earnings growth sit alongside this move in margin from 15% to 13.4%. Investors need to decide whether the lower margin is a temporary effect or a sign that growth may come with higher costs.
    • Bulls tend to focus on the absolute level of net income, at ¥2,607.6 million over the trailing period, and the higher revenue base of ¥19,468.1 million as evidence that the business is still scaling despite the margin change.
    • Bears, on the other hand, often point to the combination of margin compression and a premium P/E of 38.8x as a key risk if future quarters show similar or further margin pressure while the stock remains highly valued.

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 baudroieinc'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.

If this mix of strong figures and rich expectations for baudroieinc feels finely balanced, take a moment to review the full data, stress test your thesis, and weigh both the potential upsides and areas of concern before you decide your next move. You can start with the 2 key rewards and 1 important warning sign.

Explore Alternatives to baudroieinc

baudroieinc carries a rich 38.8x P/E alongside a lower 13.4% net margin on a trailing basis, which makes any earnings or margin disappointment more sensitive for shareholders.

If that combination of premium pricing and margin pressure feels tight for your comfort, use the 18 high quality undervalued stocks to quickly find stocks where valuation looks more forgiving and potential mispricing may be working in your favor.

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.