CVS Bay Area Inc. (2687) AI Stock Analysis

• Market Cap: ¥2.42B
• Dividend Yield: 4.73%
• Average Volume (3M): 6.05K
• Price to Earnings (P/E): 16.8
• Beta (1Y): 0.54
• Revenue Growth: 2.93%
• EPS Growth: -81.08%
• Country: JP
• Employees: 202
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Grocery Stores
• EPS (TTM): 7.83
• Shares Outstanding: 5,064,000
• 10 Day Avg. Volume: 4,010
• 30 Day Avg. Volume: 6,050
• PEG Ratio: 0.04
• Price to Book (P/B): 0.61
• Price to Sales (P/S): 0.34
• P/FCF Ratio: -2.48
• 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: 79 Outperform
• Price Target: ¥561.00 ▲(10.87% Upside)
• Action: N/A Date: 07/28/25
• Date: Action: N/A 07/28/25

CVS Bay Area Inc. scores well due to strong financial performance and attractive valuation. The company's recovery in profitability and stable balance sheet are significant strengths. Technical indicators suggest stable momentum with potential for growth. However, challenges in cash flow management and debt levels require careful monitoring.

Positive Factors

Improved Profitability Margins

Sustained margin improvement across gross, EBITDA and net levels signals stronger pricing power and cost control. Higher margins provide a durable earnings buffer, support reinvestment or deleveraging, and reduce sensitivity to revenue swings over the next several months.

Revenue Recovery

A clear rebound in topline growth indicates recovering demand and better market traction. Durable revenue growth supports scale economics, helps sustain margin gains, and provides a foundation for continued improvement in operating results over a 2-6 month horizon.

Improved ROE & Equity Base

A materially higher ROE shows more effective use of shareholder capital, while a near 39% equity ratio gives a meaningful capital cushion. Together these trends strengthen financial resilience and capacity to fund strategic initiatives without immediate external dilution.

Negative Factors

Negative Free Cash Flow

Material negative free cash flow constrains internal funding for capex, debt repayment, or dividends and increases reliance on external financing. Even with improving profits, persistent FCF deficits are a durable pressure on balance sheet flexibility and strategic optionality.

Weak Cash Conversion

Low conversion of reported earnings into operating cash suggests earnings include significant noncash items or timing gaps. This structural weakness limits the company's ability to translate profitability into liquid resources for reinvestment or debt reduction over coming quarters.

Earnings Volatility

A very large negative EPS growth metric reflects prior earnings instability and swings. Such volatility complicates planning, raises stakeholder scrutiny and financing costs, and means recent improvements may be more fragile unless earnings consistency is restored.

CVS Bay Area Inc. Business Overview & Revenue Model

Company Description

CVS Bay Area Inc. operates convenience stores under the Lawson brand in Japan. The company also operates hotels under the BAY HOTEL brand name. In addition, it provides various manned front desk and reception/office butler services for companies at condominiums; and cleaning services at convenience stores and condominiums, as well as uniform handles management services for corporations. The company operates 7 convenience stores and 8 hotels. CVS Bay Area Inc. was founded in 1981 and is headquartered in Chiba, Japan.

How the Company Makes Money

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CVS Bay Area Inc. Financial Statement Overview

Summary

CVS Bay Area Inc. has shown strong recovery in its income statement with significant revenue growth and improved profit margins. The balance sheet is stable with moderate leverage, but cash flow management remains a challenge with negative free cash flow. Overall, the company is on a positive trajectory, but attention to debt and cash flow is crucial.

Income Statement

CVS Bay Area Inc. has demonstrated a strong recovery in its income statement metrics. The company achieved a significant revenue growth rate of 4.03% from 2024 to 2025. Gross profit margin improved to 44.67%, and net profit margin increased to 14.36%, indicating enhanced profitability. The EBIT margin is at 5.39%, and EBITDA margin at 18.06%, reflecting operational efficiency. However, the company faced challenges in previous years with negative net income, which has been successfully turned around.

Balance Sheet

The balance sheet shows a stable financial position with a debt-to-equity ratio of 1.21, indicating moderate leverage. Return on equity improved significantly to 25.65%, showcasing effective use of equity capital. The equity ratio stands at 38.87%, reflecting a solid equity base. Despite the positive trajectory, the company still carries a substantial amount of debt, which could pose risks if not managed carefully.

Cash Flow

Cash flow analysis reveals some challenges, with a negative free cash flow of -1.08 billion in 2025. The operating cash flow to net income ratio is 0.37, indicating that cash generation from operations is not fully supporting net income. However, the company has shown resilience by improving its operating cash flow over the years. Continued focus on cash flow management is essential to sustain growth.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	7.90B	7.82B	7.52B	6.93B	7.21B	7.32B
Gross Profit	3.49B	3.49B	3.23B	2.57B	2.12B	1.86B
EBITDA	385.83M	572.44M	643.26M	238.81M	-160.49M	-426.13M
Net Income	241.02M	1.12B	697.62M	-13.53M	-831.52M	-1.16B
Balance Sheet
Total Assets	11.54B	11.27B	10.31B	8.68B	9.41B	10.51B
Cash, Cash Equivalents and Short-Term Investments	1.86B	1.78B	1.89B	1.77B	1.73B	1.94B
Total Debt	5.74B	5.29B	5.32B	4.48B	4.85B	4.88B
Total Liabilities	7.29B	6.89B	6.95B	5.94B	6.58B	6.79B
Stockholders Equity	4.25B	4.38B	3.36B	2.74B	2.83B	3.72B
Cash Flow
Free Cash Flow	0.00	-1.08B	-635.20M	-196.02M	-406.11M	-559.42M
Operating Cash Flow	0.00	410.52M	481.89M	-172.53M	-351.39M	120.76M
Investing Cash Flow	0.00	-384.36M	-1.08B	654.76M	232.76M	-341.04M
Financing Cash Flow	0.00	-129.65M	710.97M	-442.98M	-84.74M	550.89M

CVS Bay Area Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 506.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2687, the sentiment is Negative. The current price of 506 is above the 20-day moving average (MA) of 498.05, above the 50-day MA of 504.11, and below the 200-day MA of 538.97, indicating a bearish trend. The MACD of -4.74 indicates Positive momentum. The RSI at 42.81 is Neutral, neither overbought nor oversold. The STOCH value of 54.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:2687.

CVS Bay Area Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2687	79 Outperform	¥2.42B	16.77	―	4.73%	2.93%	-81.08%
8198	78 Outperform	¥113.61B	16.52	―	1.92%	2.30%	26.52%
7508	76 Outperform	¥60.25B	7.88	―	2.85%	11.38%	4.28%
3539	75 Outperform	¥78.99B	11.62	―	0.70%	8.48%	26.56%
8194	72 Outperform	¥216.99B	15.19	―	2.43%	4.48%	13.17%
7596	66 Neutral	¥31.93B	14.62	―	2.22%	7.94%	-8.55%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%