Cawachi Limited (2664) AI Stock Analysis

• Market Cap: ¥69.20B
• Dividend Yield: 2.68%
• Average Volume (3M): 35.49K
• Price to Earnings (P/E): 15.9
• Beta (1Y): 0.29
• Revenue Growth: -0.56%
• EPS Growth: 5.59%
• Country: JP
• Employees: 2,722
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Pharmaceuticals
• EPS (TTM): 45.10
• Shares Outstanding: 24,583,420
• 10 Day Avg. Volume: 30,120
• 30 Day Avg. Volume: 35,490
• PEG Ratio: 3.54
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.22
• P/FCF Ratio: 18.47
• 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: 72 Outperform
• Price Target: ¥3,441.00 ▲(13.75% Upside)

Cawachi Limited's strong financial position and reasonable valuation are the primary strengths, contributing to a solid overall score. The technical analysis indicates stability but lacks strong momentum, while the absence of earnings call and corporate events data limits additional insights.

Positive Factors

Balance Sheet Strength

Very low leverage and a high equity ratio provide a durable financial cushion, lowering refinancing and interest-rate risks. This balance-sheet strength supports steady store operations, opportunistic reinvestment, and resilience to sector shocks over the next several months.

Improving Cash Generation

Substantial year-over-year free cash flow growth and OCF exceeding net income indicate improving cash conversion from operations. Strong cash generation enhances liquidity for capex, working capital and dividends, reducing reliance on external financing.

Stable Gross Margin and Cost Control

A stable gross margin near 23% reflects disciplined procurement and pricing, supporting predictable unit economics across stores. Consistent margin control underpins long-term profitability potential and helps absorb cost swings in retail operations.

Negative Factors

Very Low Net Profit Margin

A sub-2% net margin leaves limited buffer for unexpected costs or investment, constraining retained earnings and free cash build-up. Over months, this weak bottom-line profitability can limit capacity to fund strategic initiatives or expand without external capital.

Weak Operating Profitability

Low EBIT and EBITDA margins signal limited operating leverage and constrained pricing power in a competitive drugstore market. Sustained low operating profitability reduces ability to scale profitably and limits funds available for marketing, store refreshes, or digital investment.

Free Cash Flow Conversion Inefficiency

Despite growth in absolute FCF, converting accounting earnings into free cash remains weak. A 0.70 conversion ratio suggests working-capital or capex drains that can limit discretionary cash for dividends, debt reduction, or growth initiatives without improving operational conversion.

Cawachi Limited Business Overview & Revenue Model

Company Description

Cawachi Limited manages drugstores in Japan. The company retails pharmaceuticals, health foods, childcare products, cosmetics, daily miscellaneous goods, general food products, confectionery products, etc. It also involved in the insurance business. The company operates 355 drugstores. Cawachi Limited was founded in 1967 and is headquartered in Oyama, Japan.

How the Company Makes Money

Cawachi Limited generates revenue through multiple streams, predominantly from the direct sale of products in its retail stores and online platforms. The company employs a retail model that emphasizes volume sales, leveraging its extensive product range to attract a broad customer base. Additionally, Cawachi Limited may benefit from supplier partnerships that allow for favorable purchasing terms, enhancing profit margins. Seasonal promotions and discounts also play a critical role in driving sales, especially during peak shopping periods. Furthermore, the company may engage in loyalty programs, which encourage repeat business and customer retention, contributing to consistent income generation.

Cawachi Limited Financial Statement Overview

Summary

Cawachi Limited demonstrates stable revenue growth and strong cost control, with a solid balance sheet indicating low leverage and high equity. However, profitability and cash flow efficiency need improvement.

Income Statement

Cawachi Limited's income statement shows a stable revenue growth with a 0.65% increase from the previous year. The gross profit margin is consistent at around 23.2%, indicating strong cost management and efficiency. However, the net profit margin is relatively low at approximately 1.7%, suggesting limited profitability. The EBIT margin is low at 2.6%, but the EBITDA margin is slightly better at 3.9%, showcasing some operational efficiency. Overall, the company demonstrates stable revenue growth and strong cost control, but profitability remains a concern.

Balance Sheet

The balance sheet of Cawachi Limited displays a solid financial structure with a debt-to-equity ratio of 0.15, indicating low leverage. The return on equity is stable at 4.3%, showing efficient use of equity to generate profits. The equity ratio is strong at 57.3%, reflecting financial stability and a low reliance on debt. Overall, the balance sheet indicates a strong financial position with low leverage and high equity.

Cash Flow

Cawachi Limited's cash flow statement shows a significant improvement in free cash flow, with a growth rate of 232.5% from the previous year. The operating cash flow to net income ratio is 1.53, demonstrating strong cash generation relative to net income. However, the free cash flow to net income ratio is lower at 0.70, indicating some challenges in converting income into free cash flow. The cash flow position is improving, but there remains room for better conversion of earnings to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	287.50B	287.82B	285.96B	281.87B	279.46B	284.49B
Gross Profit	66.44B	66.66B	65.80B	64.05B	63.15B	64.68B
EBITDA	10.85B	11.36B	11.49B	10.90B	12.16B	15.17B
Net Income	4.75B	4.88B	4.71B	4.18B	4.83B	7.11B
Balance Sheet
Total Assets	203.63B	199.60B	196.12B	194.50B	191.72B	194.10B
Cash, Cash Equivalents and Short-Term Investments	40.72B	36.67B	35.62B	38.45B	38.96B	41.23B
Total Debt	17.92B	16.60B	16.73B	19.55B	22.92B	26.41B
Total Liabilities	89.95B	85.19B	84.83B	86.77B	87.07B	93.24B
Stockholders Equity	113.68B	114.41B	111.30B	107.72B	104.65B	100.86B
Cash Flow
Free Cash Flow	0.00	3.40B	1.02B	4.11B	2.37B	12.09B
Operating Cash Flow	0.00	7.48B	6.40B	9.82B	6.87B	15.27B
Investing Cash Flow	0.00	-4.51B	-5.29B	-5.84B	-4.54B	-3.15B
Financing Cash Flow	0.00	-1.92B	-3.94B	-4.49B	-4.61B	-3.98B

Cawachi Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3025.00
• 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:2664, the sentiment is Positive. The current price of 3025 is below the 20-day moving average (MA) of 3047.00, above the 50-day MA of 3003.12, and above the 200-day MA of 2890.65, indicating a bullish trend. The MACD of 20.28 indicates Positive momentum. The RSI at 61.41 is Neutral, neither overbought nor oversold. The STOCH value of 49.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2664.

Cawachi Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3148	75 Outperform	¥205.14B	12.67	―	2.35%	7.55%	16.01%
2664	72 Outperform	¥69.20B	15.87	―	2.68%	-0.56%	5.59%
9989	69 Neutral	¥481.72B	15.18	11.50%	3.04%	6.32%	8.19%
3391	67 Neutral	¥1.11T	27.51	―	1.72%	―	―
3549	67 Neutral	¥387.34B	21.69	―	0.41%	15.81%	27.05%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Cawachi Limited Corporate Events

Cawachi Limited Posts Profit Decline but Boosts Anniversary Dividend Amid Stable Financial Base

Cawachi Limited reported consolidated net sales of ¥214.99 billion for the nine months ended December 15, 2025, down 0.9% year on year, with operating profit falling 20.0% to ¥4.62 billion and profit attributable to owners of parent declining 13.1% to ¥3.47 billion, reflecting margin pressures and a weaker earnings profile despite stable overall scale. The company’s financial position remained robust with total assets of ¥205.10 billion and an equity-to-asset ratio of 56.6%, and it plans to raise its full-year dividend to ¥100 per share, including a ¥20 commemorative payout for its 65th anniversary, even as it forecasts slightly lower full-year sales and a more than 20% drop in full-year profit, signaling a commitment to shareholder returns amid a challenging earnings environment.

The most recent analyst rating on (JP:2664) stock is a Buy with a Yen3441.00 price target. To see the full list of analyst forecasts on Cawachi Limited stock, see the JP:2664 Stock Forecast page.