PAL GROUP Holdings Co., Ltd. (2726) AI Stock Analysis

• Market Cap: ¥262.97B
• Dividend Yield: 1.46%
• Average Volume (3M): 642.83K
• Price to Earnings (P/E): 19.6
• Beta (1Y): -0.31
• Revenue Growth: 12.02%
• EPS Growth: -15.70%
• Country: JP
• Employees: 3,804
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 27.73
• Shares Outstanding: 185,091,630
• 10 Day Avg. Volume: 494,980
• 30 Day Avg. Volume: 642,826
• PEG Ratio: -3.08
• Price to Book (P/B): 3.78
• Price to Sales (P/S): 1.29
• P/FCF Ratio: 14.01
• 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): 116.7
• Revenue Forecast (FY): ¥254.50B

• Rating: 70 Outperform
• Price Target: ¥1,584.00 ▼(-18.81% Downside)
• Action: Upgraded Date: 01/15/26
• Date: Action: Upgraded 01/15/26

The score is primarily supported by strong financial performance (notably robust free cash flow and a low-leverage balance sheet). This is partially offset by weak technicals—price below key moving averages with negative MACD and very depressed momentum—while valuation is only moderately supportive (P/E ~20 and ~1.7% yield).

Positive Factors

Free Cash Flow Strength

Consistent and growing free cash flow indicates durable cash generation ability. Strong operating cash conversion and controlled capex support reinvestment, dividend or buyback flexibility and reduce reliance on external financing, bolstering long-term operational resilience.

Low Leverage / Robust Balance Sheet

A low debt-to-equity profile and healthy equity ratio provide financial flexibility to fund growth, absorb shocks, and pursue M&A or store/network investments. This conservatism supports credit stability and reduces refinancing risk over the medium term.

Revenue and Profitability Trends

Sustained revenue growth with expanding gross and net margins points to effective product planning, sourcing and cost control. Improving profitability trends indicate scalable operations and a stronger ability to convert sales into lasting earnings power across cycles.

Negative Factors

Recent Net Income Dip

A recent decline in net income flags potential margin volatility or one-off pressures. If persistent, it could erode earnings momentum and free cash flow growth, requiring management action on pricing, sourcing or cost structure to sustain long-term profitability.

Modest Uptick in Debt

Although leverage remains low, an upward debt trend reduces future financial flexibility if continued. Rising debt alongside profit softness could constrain investment choices, increase interest burden and limit capacity for opportunistic strategic moves over the medium term.

Apparel Inventory & Markdown Risk

The apparel retail model exposes the company to inventory risk and markdown-driven margin erosion. Seasonal trends, fashion shifts and inventory missteps can force discounting, pressuring gross margins and cash conversion, a structural risk for long-term margin sustainability.

PAL GROUP Holdings Co., Ltd. Business Overview & Revenue Model

Company Description

PAL GROUP Holdings CO., LTD. engages in the apparel, and miscellaneous goods and accessories businesses primarily in Japan. The company engages in the manufacture, wholesale, and retail of apparel products, including men's and women's clothing and accessories. It also offers miscellaneous daily goods. As of February 28, 2022, the company operated through a network of 902 stores. The company was formerly known as Pal Co., Ltd. and changed its name to PAL GROUP Holdings CO., LTD. in September 2016. PAL GROUP Holdings CO., LTD. was incorporated in 1973 and is headquartered in Osaka, Japan.

How the Company Makes Money

The company makes money mainly through sales of apparel and related lifestyle products under its portfolio of brands. Revenue is generated when customers purchase products via (1) directly operated retail stores and (2) online channels (e-commerce), with sales recorded at the point of sale. Earnings are driven by gross margin on merchandise (selling price minus cost of goods), which is influenced by product planning, sourcing/manufacturing costs, inventory management (including discounting/markdowns), and the mix of full-price versus promotional sales. As a holding company, PAL GROUP Holdings earns consolidated revenue and profit from its subsidiaries’ retail and merchandising operations; it may also receive internal cash flows such as dividends or management/service fees from group companies, but specific amounts or arrangements are null.

PAL GROUP Holdings Co., Ltd. Financial Statement Overview

Summary

Strong overall fundamentals driven by excellent cash flow (90) and solid profitability trends (income statement 88), supported by a robust, low-leverage balance sheet (85). A slight recent dip in net income and a modest uptick in debt are key items to monitor.

Income Statement

The income statement reflects strong growth and profitability. Revenue has shown consistent growth over the years with a notable increase in gross profit margins. Net profit margins and EBIT margins have improved significantly, indicating efficient cost management and operational strength. However, there was a slight dip in net income in the most recent year, which should be monitored.

Balance Sheet

The balance sheet is robust with a strong equity base and low leverage. The debt-to-equity ratio is low, indicating financial stability and a conservative approach to debt. Return on Equity is commendable, reflecting efficient use of shareholder funds. The equity ratio suggests a healthy balance between assets and equity, although a slight increase in debt is observable.

Cash Flow

Cash flow performance is very strong, with consistent growth in free cash flow. The operating cash flow to net income ratio indicates a solid conversion of earnings into cash, and the free cash flow to net income ratio supports a sustainable cash generation model. The company has effectively managed capital expenditures, supporting growth without stressing cash reserves.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	223.65B	207.82B	192.54B	164.48B	134.20B	108.52B
Gross Profit	126.46B	116.26B	106.28B	90.22B	74.31B	59.24B
EBITDA	28.87B	26.18B	20.87B	17.86B	9.01B	2.28B
Net Income	13.37B	11.85B	12.84B	9.95B	4.00B	270.00M
Balance Sheet
Total Assets	160.56B	148.82B	127.66B	113.08B	93.92B	108.47B
Cash, Cash Equivalents and Short-Term Investments	90.54B	85.72B	67.23B	63.84B	52.25B	63.09B
Total Debt	12.82B	14.74B	12.85B	12.97B	12.95B	29.07B
Total Liabilities	83.21B	75.46B	64.21B	57.89B	46.53B	64.11B
Stockholders Equity	74.83B	70.89B	63.44B	55.18B	47.33B	44.35B
Cash Flow
Free Cash Flow	0.00	19.15B	10.49B	14.67B	6.49B	-297.00M
Operating Cash Flow	0.00	22.04B	13.46B	17.03B	7.97B	1.45B
Investing Cash Flow	0.00	792.00M	-4.40B	-2.60B	-582.00M	-1.19B
Financing Cash Flow	0.00	-4.36B	-5.67B	-2.83B	-18.23B	10.10B

PAL GROUP Holdings Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1951.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2726, the sentiment is Negative. The current price of 1951 is above the 20-day moving average (MA) of 1546.79, above the 50-day MA of 1621.77, and below the 200-day MA of 2021.98, indicating a bearish trend. The MACD of -47.32 indicates Positive momentum. The RSI at 31.83 is Neutral, neither overbought nor oversold. The STOCH value of 13.03 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:2726.

PAL GROUP Holdings Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9983	75 Outperform	¥19.94T	29.11	19.84%	0.90%	9.56%	16.37%
2792	72 Outperform	¥41.52B	10.95	―	3.62%	-0.98%	-29.86%
7606	72 Outperform	¥70.61B	3.05	―	2.73%	10.48%	-34.38%
8219	71 Outperform	¥122.90B	24.22	5.53%	6.09%	-1.03%	4.12%
2726	70 Outperform	¥262.97B	19.60	―	1.46%	12.02%	-15.70%
8227	68 Neutral	¥746.94B	16.45	8.48%	2.02%	―	―
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

PAL GROUP Holdings Co., Ltd. Corporate Events

PAL GROUP Holdings Revamps Board and Audit Team Ahead of 2026 Shareholders’ Meeting

PAL GROUP Holdings has announced a series of board and audit personnel changes, set to be finalized at its 54th Ordinary General Meeting of Shareholders on May 27, 2026, as part of an update to its governance structure. Effective March 1, 2026, Director Ryuta Inoue will be promoted to Senior Managing Director, while Executive Officer Manaka Inoue, currently head of the Corporate Planning Office, will become Director and Executive Officer overseeing the same function, and Outside Director Kensaku Teranishi will retire on May 27, 2026. In addition, current Auditor Mikiko Nakazawa will move to the role of Outside Director, and certified public accountant Chiharu Odagiri, who has extensive audit and outside director experience at multiple Japanese companies, has been nominated as a new Auditor, underscoring the company’s emphasis on strengthening its oversight, audit capabilities, and corporate governance framework.

The most recent analyst rating on (JP:2726) stock is a Hold with a Yen2246.00 price target. To see the full list of analyst forecasts on PAL GROUP Holdings Co., Ltd. stock, see the JP:2726 Stock Forecast page.

PAL GROUP Holdings to Raise Year-End Dividend on Strong Earnings

PAL GROUP Holdings will propose a year-end dividend of ¥40 per share for the fiscal year ending February 28, 2026, up from its previous forecast of ¥30, with a total payout of ¥6.9 billion sourced from retained earnings and an expected payout ratio of 41.2%. Citing higher sales and profits in the first nine months of the current fiscal year, the company is using the dividend increase to underscore its policy of stable shareholder returns and signal confidence in its earnings momentum ahead of a shareholder vote at the May 27, 2026 annual meeting.

The most recent analyst rating on (JP:2726) stock is a Hold with a Yen2246.00 price target. To see the full list of analyst forecasts on PAL GROUP Holdings Co., Ltd. stock, see the JP:2726 Stock Forecast page.

PAL GROUP Delivers Strong Nine-Month Earnings and Ups Dividend Payout After Stock Split

PAL GROUP Holdings reported robust results for the nine months ended November 30, 2025, with net sales rising 15.6% year on year to ¥176.35 billion and operating profit up 17.9% to ¥21.54 billion, while profit attributable to owners of parent surged 56.2% to ¥14.0 billion, lifting basic earnings per share to ¥80.63 after reflecting a 2-for-1 stock split. The company’s financial position strengthened as total assets expanded to ¥168.40 billion and equity increased, and management raised its dividend stance by forecasting a total annual dividend equivalent to ¥80 per share on a pre-split basis for FY2025, while maintaining its full-year outlook of ¥231.0 billion in net sales and ¥16.85 billion in profit attributable to owners of parent, signaling confidence in sustained growth and enhanced shareholder returns.

The most recent analyst rating on (JP:2726) stock is a Hold with a Yen2246.00 price target. To see the full list of analyst forecasts on PAL GROUP Holdings Co., Ltd. stock, see the JP:2726 Stock Forecast page.