Watanabe Sato Co., Ltd. (1807) AI Stock Analysis

• Market Cap: ¥12.43B
• Dividend Yield: 4.39%
• Average Volume (3M): 8.58K
• Price to Earnings (P/E): 12.0
• Beta (1Y): 0.64
• Revenue Growth: 2.65%
• EPS Growth: 45.12%
• Country: JP
• Employees: 497
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 56.76
• Shares Outstanding: 6,391,400
• 10 Day Avg. Volume: 2,360
• 30 Day Avg. Volume: 8,576
• PEG Ratio: -0.43
• Price to Book (P/B): 0.48
• Price to Sales (P/S): 0.25
• P/FCF Ratio: -2.28
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: ¥2,311.00 ▲(22.40% Upside)
• Action: Reiterated Date: 10/29/25
• Date: Action: Reiterated 10/29/25

Watanabe Sato Co., Ltd. receives a moderate overall stock score. The company's strong balance sheet and attractive valuation are significant positives. However, technical indicators suggest weak market momentum, and challenges in revenue growth and cash flow generation pose potential risks.

Positive Factors

Strong balance sheet

Low leverage and a healthy equity ratio provide durable financial flexibility. This capital structure lets the company absorb cyclical shocks, access capital for selective investments or bids, and reduce refinancing risk, supporting steady operations over months.

Positive return on equity

A positive ROE indicates the firm generates returns on invested capital, signalling competent capital allocation and operational effectiveness. Sustained ROE supports reinvestment potential and long-term shareholder value if profitability is maintained.

Stable gross margins

Stable gross margins imply enduring pricing power or consistent input control in core engineering activities. Even with revenue variability, steady gross margins help preserve core profitability and allow management to focus on improving operating leverage.

Negative Factors

Revenue contraction

Negative and inconsistent top-line trends reduce scale benefits and make long-term planning harder. Persistent revenue contraction can erode market position, weaken bargaining power with suppliers, and compress ability to invest in business development or backlog execution.

Weak free cash flow

Negative free cash flow and volatile operating cash flow limit the firm's ability to fund capex, service debt, or return cash to shareholders without external financing. Over months this constrains strategic flexibility and increases funding risk for growth initiatives.

Declining net and operating margins

Compression in net and operating margins indicates rising costs or weakening pricing power. Sustained margin decline undermines profitability resilience, reduces free cash generation, and can erode ROE, making it harder to sustain investments or dividends over time.

Watanabe Sato Co., Ltd. Business Overview & Revenue Model

Company Description

Watanabe Sato Co., Ltd. engages in the contracting and investigation, research, planning, designing, supervision, technical guidance, and consultation of civil engineering construction activities. It offers porous concrete and asphalt pavement systems, asphalt mixture, block systems, resin pavement, turf, vegetation blocks, sports courts, paving materials and construction methods, rainwater storage infiltration and runoff control methods, multi-natural bank protection methods, disaster prevention/emergency maintenance measures countermeasure construction methods, repair/maintenance methods, chipping/surface treatments, and top coat/coating films. The company also manufactures and sells construction materials. In addition, it engages in the design, manufacture, leasing, and sale of construction equipment for construction work; industrial waste processing business; and purchase, lease, brokerage, sale, and management of real estate properties. The company was founded in 1923 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Watanabe Sato Co., Ltd. generates revenue primarily through the sale of its traditional Japanese paper products, which serve a wide range of applications including art, calligraphy, and crafting. The company leverages its long-standing reputation for quality to attract both individual consumers and businesses. Key revenue streams include direct sales through retail channels, online platforms, and partnerships with educational institutions and art supply stores. Additionally, Watanabe Sato Co., Ltd. engages in strategic collaborations with artists and designers to develop exclusive product lines, further driving sales. The company also benefits from export opportunities, tapping into global markets that appreciate traditional Japanese craftsmanship.

Watanabe Sato Co., Ltd. Financial Statement Overview

Summary

Watanabe Sato Co., Ltd. exhibits a stable financial position with a strong balance sheet and moderate profitability. However, challenges in revenue growth and cash flow generation could impact future financial flexibility. The low leverage and solid equity position provide a buffer against potential financial risks.

Income Statement

Watanabe Sato Co., Ltd. has demonstrated a mixed performance in terms of profitability and growth. The gross profit margin has been relatively stable, but the net profit margin has shown some decline over the years. Revenue growth has been inconsistent, with some years of contraction. The EBIT and EBITDA margins indicate moderate operational efficiency but have decreased in recent periods.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio, indicating prudent financial leverage. Return on equity has been positive, reflecting effective use of shareholder funds. The equity ratio is healthy, suggesting a solid capital structure with substantial equity backing the assets.

Cash Flow

Cash flow analysis reveals some challenges, particularly in free cash flow generation, which has been negative in recent periods. Operating cash flow has fluctuated, impacting the company's ability to consistently generate cash from operations. The free cash flow to net income ratio indicates potential issues in converting profits into free cash flow.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	40.52B	40.42B	38.40B	34.66B	37.45B	39.92B
Gross Profit	3.59B	3.46B	4.06B	2.77B	4.56B	4.71B
EBITDA	2.23B	1.98B	2.45B	1.31B	3.10B	3.33B
Net Income	1.08B	891.64M	1.20B	446.67M	1.73B	1.84B
Balance Sheet
Total Assets	30.41B	35.43B	35.13B	32.28B	32.63B	32.38B
Cash, Cash Equivalents and Short-Term Investments	5.33B	5.03B	7.62B	4.80B	6.00B	4.19B
Total Debt	127.07M	2.80B	40.87M	160.30M	216.14M	312.63M
Total Liabilities	9.21B	14.01B	13.99B	12.92B	13.53B	14.43B
Stockholders Equity	21.11B	21.34B	21.06B	19.28B	19.03B	17.87B
Cash Flow
Free Cash Flow	0.00	-4.49B	3.03B	-271.32M	2.61B	1.75B
Operating Cash Flow	0.00	-3.96B	3.48B	187.68M	3.28B	2.06B
Investing Cash Flow	0.00	-625.68M	-437.98M	-929.69M	-799.90M	-382.50M
Financing Cash Flow	0.00	2.00B	-412.42M	-455.77M	-679.72M	-1.33B

Watanabe Sato Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1888.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1807, the sentiment is Positive. The current price of 1888 is below the 20-day moving average (MA) of 2004.05, below the 50-day MA of 1942.68, and above the 200-day MA of 1752.81, indicating a bullish trend. The MACD of 50.96 indicates Negative momentum. The RSI at 68.13 is Neutral, neither overbought nor oversold. The STOCH value of 85.98 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1807.

Watanabe Sato Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1807	71 Outperform	¥12.43B	12.02	―	4.39%	2.65%	45.12%
1768	70 Outperform	¥11.92B	10.64	―	2.16%	24.11%	1644.12%
1853	68 Neutral	¥11.33B	13.42	―	4.35%	-7.40%	60.55%
1401	67 Neutral	¥11.55B	20.88	―	0.99%	21.18%	53.16%
1848	64 Neutral	¥11.36B	4.48	―	2.33%	7.66%	562.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
1844	61 Neutral	¥10.45B	22.00	―	2.74%	4.36%	17.63%