[Summary]
From the financial results of each company disclosed on May 12, 2026, we selected three stocks of interest for our analysis based on operating profit growth, next fiscal year outlook, PER, equity ratio, cash flow, and profit quality.
The three stocks to watch are Nippon Avionics, Tokyo Enesis, and Takasago Thermal Engineering.
This time's top candidates are not just companies with a simple profit growth rate, but also companies that are expected to increase profits next fiscal year, companies that can see an improvement in profit margins, and companies that have financial strength. On the other hand, we also include important points to note, such as the capital investment cycle, construction costs, and operating cash flow.
This list is a comparison based on financial statements disclosed on the same day and is not a portfolio instruction. Stock prices fluctuate not only based on business performance, but also on market expectations and supply and demand.
Selection policy
In the selection process, we looked at each company's financial statements and explanatory materials to check sales growth, operating profit growth, improvement in operating profit margin, company forecasts for the next fiscal year, EPS, PER, equity ratio, and operating cash flow.
What we focused on was whether improvements could be confirmed not only in net income but also in operating income. If net income includes one-time gains or gains on sales, it includes factors different from the earning power of the main business.
The three companies listed here are "top candidates that we would like to further check based on their financial results," and our conclusions are not based on short-term price fluctuations. Company forecasts may change depending on the external environment.
3 stocks to watch
| Company name | Code | Fiscal year end | Reason for attention | Points to note | Details |
|---|---|---|---|---|---|
| [Nippon Avionics | 6946](/securities/6946/quarterly/2026-05-12-6946-2026Q4.html) | Full year ending March 2026 | Sales increased by 45.1%, operating income increased by 97.2%. Growth and capital efficiency are outstanding with an operating profit margin of 18.9% and ROE of 25.4%. | Forecast PER is approximately 23.3 times, which tends to include growth assumptions. Operating cash flow is negative. | Details |
| [Tokyo Enesis | 1945](/securities/1945/quarterly/2026-05-12-1945-2026Q4.html) | Full year ending March 2026 | Sales increased by 22.7%, operating income increased by 77.8%. The company plans to increase operating income by 54.1% next fiscal year, with a PER of approximately 12.9 times. | Profits tend to fluctuate depending on construction profitability, labor costs, material prices, and project progress. | Details |
| [Takasago Thermal Engineering | 1969](/securities/1969/quarterly/2026-05-12-1969-2026Q4.html) | Full year ending March 2026 | Operating income increased by 47.3%, operating profit margin improved to 11.3%. Orders increased by 10.6%, and we plan to increase sales and profits next fiscal year as well. | Materials and equipment prices, labor costs, and process delays may reduce profit margins. | Details |
View of the top 3 companies
Nippon Avionics stands out in the same day's article for its growth in sales and operating income. ROE of 25.4% is also a strong figure, but since operating cash flow is negative, we would like to see whether sales growth leads to cash generation from next time onwards.
Both Tokyo Enesis and Takasago Thermal Engineering are seeing improvements in profitability related to construction and equipment. While orders and construction progress support profit growth, a common risk is that profit margins tend to fluctuate when labor costs and material prices rise.
What all three companies have in common is that while operating profit growth can be confirmed, market expectations may have already been factored into their forecasts. It is necessary to check whether the stock price reaction after the announcement of financial results is overheated, along with the PER and cash flow.
Features by sector
This year's top three companies focus on themes close to infrastructure investment and capital investment: electronic equipment, defense/communications, power/equipment construction, and air conditioning equipment construction.
While Nippon Avionics is easily evaluated for its growth potential in defense, information systems, and electronic equipment, there are times when cash flow is weak due to upfront investment and working capital burdens.
Tokyo Enesys and Takasago Thermal Engineering's performance is supported by strong demand for equipment construction. However, as this industry is strongly affected by economic cycles, construction profitability, labor costs, and material prices, performance is not constant.
Send-off/Runner Candidate
V Technology has shown great resilience in operating income, and we have strong plans for next fiscal year as well. However, because performance in equipment-related businesses tends to fluctuate depending on customers' capital investment decisions, we have excluded them from the top three companies this time.
Business Engineering, MTG, Sports Field, Orbi Systems, Mizuno, and SBI Insurance Group are also confirmed candidates. However, as the title suggests, this article focuses on the top three companies.
Points to check after tomorrow
The first thing we want to check is whether the stock price reaction after the day after the earnings announcement is overheated in response to earnings growth. Even with strong financial results, the reaction may be limited if the market is already pricing in high growth.
Next are the assumptions for the company's forecasts. Even if a stock has a plan to increase sales and profits, the appearance of the plan will change as foreign exchange rates, labor costs, material prices, project progress, and capital investment cycles change.
Lastly, there is consistency between operating income and cash flow. Even if operating income is growing, if operating cash flow is weak due to trade receivables, inventory, and upfront investments, you need to additionally check the quality of growth.
Summary
In the analysis of financial results on May 12, 2026, three companies are the top candidates: Nippon Avionics, Tokyo Enesis, and Takasago Thermal Engineering.
All three companies can see growth in operating income and improvement in profit margins. On the other hand, by looking at PER, cash flow, construction profitability, and industry cycles together, it becomes easier to reduce misreading of financial results.
Source
This article is based on each company's financial statements, financial results briefing materials, and other financial documents disclosed on May 12, 2026, and is based on a cross-sectional comparison of business results, company forecasts, financial stability, and stock price indicators.
When using supplementary market data such as stock price and PER, we check the reference sources listed in each individual article.