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

• Market Cap: ¥11.94B
• Dividend Yield: 4.39%
• Average Volume (3M): 8.58K
• Price to Earnings (P/E): 8.3
• Beta (1Y): 0.65
• 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: ¥2,220.00 ▲(17.58% 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, reducing refinancing and distress risk. Over a 2–6 month horizon this balance sheet strength supports capital spending, tender participation in engineering projects, and resilience through downturns in the cyclical construction cycle.

Positive return on equity

A positive ROE signals the company earns returns above its equity base, implying competent capital allocation and operating discipline. Sustained ROE supports reinvestment and dividend capacity, helping maintain competitiveness and fund strategic initiatives in the medium term.

Stable gross margins

Consistent gross margins indicate controlled direct costs and pricing power on core engineering services. That stability underpins operational durability, enabling planning for project pipelines and helping absorb short-term revenue volatility without immediate margin collapse.

Negative Factors

Negative revenue trend

A multi-period revenue contraction signals persistent demand or market share challenges in its engineering and construction markets. Continued top-line decline constrains economies of scale, reduces bargaining power with suppliers, and limits capacity to rebuild margins or fund strategic investments.

Weak free cash flow

Negative free cash flow undermines the company’s ability to self-fund capex, repay liabilities, or sustain distributions without drawing on reserves. Over months this weak cash conversion heightens dependence on external financing and limits agility to invest in backlog or growth initiatives.

Declining net & operating margins

Eroding net and operating margins reduce the buffer against higher costs or tender competition in construction projects. Persisting margin compression will lower retained earnings, restrict reinvestment, and make it harder to sustain returns to shareholders in the face of cyclical headwinds.

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

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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	3.67B	3.46B	3.98B	2.71B	4.50B	4.66B
EBITDA	1.92B	1.82B	2.32B	1.19B	3.05B	3.27B
Net Income	1.08B	891.64M	1.20B	446.67M	1.73B	1.84B
Balance Sheet
Total Assets	30.41B	36.01B	35.62B	32.51B	32.77B	32.51B
Cash, Cash Equivalents and Short-Term Investments	5.33B	5.03B	7.62B	4.80B	6.00B	4.19B
Total Debt	127.07M	2.97B	229.39M	267.75M	216.14M	312.63M
Total Liabilities	9.21B	14.59B	14.48B	13.15B	13.66B	14.56B
Stockholders Equity	21.11B	21.34B	21.06B	19.28B	19.03B	17.87B
Cash Flow
Free Cash Flow	0.00	-4.49B	3.11B	-184.43M	2.64B	1.79B
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: Neutral
• Last Price: 1888.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1807, the sentiment is Neutral. The current price of 1888 is below the 20-day moving average (MA) of 2043.75, below the 50-day MA of 1981.56, and above the 200-day MA of 1780.36, indicating a neutral trend. The MACD of 10.50 indicates Positive momentum. The RSI at 48.98 is Neutral, neither overbought nor oversold. The STOCH value of 62.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	¥11.94B	8.32	―	4.39%	2.65%	45.12%
1853	68 Neutral	¥11.04B	9.54	―	4.35%	-7.40%	60.55%
1401	67 Neutral	¥10.77B	13.10	―	0.99%	21.18%	53.16%
1768	66 Neutral	¥10.54B	6.31	―	2.16%	24.11%	1644.12%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
1844	62 Neutral	¥11.25B	11.79	―	2.74%	4.36%	17.63%
1848	46 Neutral	¥10.19B	190.24	―	2.33%	7.66%	562.50%