Watts Co., Ltd. (2735) AI Stock Analysis

• Market Cap: ¥8.87B
• Dividend Yield: 3.39%
• Average Volume (3M): 47.25K
• Price to Earnings (P/E): 10.4
• Beta (1Y): <0.01
• Revenue Growth: 0.52%
• EPS Growth: -3.73%
• Country: JP
• Employees: 436
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Grocery Stores
• EPS (TTM): 21.03
• Shares Outstanding: 13,458,800
• 10 Day Avg. Volume: 68,620
• 30 Day Avg. Volume: 47,246
• PEG Ratio: 0.04
• Price to Book (P/B): 0.79
• Price to Sales (P/S): 0.16
• P/FCF Ratio: 2.85
• 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: ¥771.00
• Price Target Upside: 12.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 75 Outperform
• Price Target: ¥771.00 ▲(12.06% Upside)

Watts Co., Ltd. demonstrates solid financial performance with strong improvements in revenue and cash flow, supporting a positive outlook. The stock's valuation is attractive with a low P/E ratio and a decent dividend yield. However, technical indicators suggest caution, as the stock is currently trading below key moving averages and shows mixed momentum signals.

Watts Co., Ltd. Business Overview & Revenue Model

Company Description

Watts Co., Ltd., together with its subsidiaries, engages in the wholesale and retail business of daily necessities and household items in Japan and internationally. It is also involved in the retail business of groceries; and wholesale and retail business of life and other miscellaneous goods. In addition, the company operates its stores under the 100-Yen shop brand. Further, it operates a grocery store under the Buona vita brand; time-themed general store under the Tokino: ne brand; and uniform shop under the KOMONOYA and KOMONOKAEN brands. Watts Co., Ltd. was incorporated in 1995 and is headquartered in Osaka, Japan.

How the Company Makes Money

Watts Co., Ltd. generates revenue primarily through its chain of '100 Yen Shops,' which serve as the company's main retail outlets. The company sources a wide variety of household and lifestyle products at low cost and sells them at competitive prices, typically at 100 yen per item. This business model relies on high volume sales to drive profitability. Additionally, Watts Co., Ltd. may engage in strategic partnerships with suppliers to streamline its product offerings and maintain cost efficiency. The company's revenue is influenced by factors such as consumer demand, economic conditions, and its ability to manage supply chain logistics effectively.

Watts Co., Ltd. Financial Statement Overview

Summary

Watts Co., Ltd. shows strong financial health with notable improvements in revenue and profitability. A healthy gross profit margin of 38.5% and a net profit margin of 1.5% point to effective cost management and enhanced profitability. The balance sheet reflects low leverage with a debt-to-equity ratio of 0.26, and cash flow management has significantly strengthened, indicating robust financial stability.

Income Statement

Watts Co., Ltd. has shown a strong performance in revenue growth with a 3.3% increase from the previous year. The gross profit margin remains healthy at 38.5%, indicating effective cost management. The net profit margin improved significantly to 1.5%, highlighting enhanced profitability. EBIT and EBITDA margins are at 2.0% and 3.2% respectively, showing operational efficiency.

Balance Sheet

The company's debt-to-equity ratio is 0.26, suggesting a conservative approach to leverage, which reduces financial risk. The return on equity is 7.2%, reflecting a reasonable level of profitability for shareholders. Equity ratio stands at 41.3%, indicating a stable capital structure and reliance on equity financing.

Cash Flow

Watts Co., Ltd. demonstrated remarkable improvement in cash flow, with free cash flow growing significantly. The operating cash flow to net income ratio is 4.47, indicating strong cash generation relative to net income. Despite previous negative free cash flow, the company has achieved robust free cash flow figures this period, signaling improved cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	61.66B	61.26B	59.31B	58.35B	50.70B	52.80B
Gross Profit	23.78B	23.59B	22.45B	22.28B	19.63B	20.22B
EBITDA	1.95B	1.97B	1.10B	1.68B	1.97B	1.52B
Net Income	735.69M	904.15M	250.58M	781.18M	965.83M	774.38M
Balance Sheet
Total Assets	30.37B	30.28B	25.49B	25.60B	21.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	8.92B	9.38B	5.65B	6.69B	6.17B	6.59B
Total Debt	3.74B	3.28B	2.88B	3.01B	1.12B	1.25B
Total Liabilities	17.64B	17.76B	13.52B	13.67B	10.12B	11.06B
Stockholders Equity	12.73B	12.52B	11.96B	11.93B	11.22B	10.48B
Cash Flow
Free Cash Flow	0.00	3.49B	-398.77M	1.06B	-383.70M	380.29M
Operating Cash Flow	0.00	4.04B	221.06M	1.72B	378.26M	922.10M
Investing Cash Flow	0.00	-538.15M	-667.97M	-975.79M	-778.97M	-526.29M
Financing Cash Flow	0.00	233.22M	-633.15M	-328.61M	-51.97M	106.09M

Watts Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 688.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2735, the sentiment is Positive. The current price of 688 is above the 20-day moving average (MA) of 652.30, above the 50-day MA of 659.78, and above the 200-day MA of 675.53, indicating a bullish trend. The MACD of 2.11 indicates Negative momentum. The RSI at 72.23 is Negative, neither overbought nor oversold. The STOCH value of 98.11 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2735.

Watts Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2735	75 Outperform	¥8.87B	10.42	―	3.39%	0.52%	-3.73%
9890	73 Outperform	¥12.14B	7.60	―	2.26%	14.35%	11.49%
3096	70 Outperform	¥13.04B	12.00	―	1.59%	5.93%	-14.18%
9846	67 Neutral	¥11.04B	8.20	―	1.46%	-0.02%	-7.09%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
9993	51 Neutral	¥12.82B	―	―	2.30%	2.43%	50.53%
3094	43 Neutral	¥10.05B	―	―	―	-12.69%	22.75%