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Watts Co., Ltd. (JP:2735)
:2735
Japanese Market
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Watts Co., Ltd. (2735) AI Stock Analysis

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JP:2735

Watts Co., Ltd.

(2735)

Rating:75Outperform
Price Target:
¥771.00
▲(12.39%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. (2735) vs. iShares MSCI Japan ETF (EWJ)

Watts Co., Ltd. Business Overview & Revenue Model

Company DescriptionWatts Co., Ltd. (2735) is a Japan-based company primarily engaged in the wholesale and retail of household goods. Operating within the retail sector, the company offers a diverse range of products including kitchenware, household items, and lifestyle goods. Watts Co., Ltd. is known for its '100 Yen Shops,' where it provides affordable and convenient shopping options for customers seeking everyday essentials and novelty items.
How the Company Makes MoneyWatts 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
85
Very Positive
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
75
Positive
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
80
Positive
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.
BreakdownSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue61.26B59.31B58.35B50.70B52.80B
Gross Profit23.59B22.45B22.28B19.63B20.22B
EBITDA1.97B1.10B1.68B1.97B1.52B
Net Income904.15M250.58M781.18M965.83M774.38M
Balance Sheet
Total Assets30.28B25.49B25.60B21.34B21.54B
Cash, Cash Equivalents and Short-Term Investments9.38B5.65B6.69B6.17B6.59B
Total Debt3.28B2.88B3.01B1.12B1.25B
Total Liabilities17.76B13.52B13.67B10.12B11.06B
Stockholders Equity12.52B11.96B11.93B11.22B10.48B
Cash Flow
Free Cash Flow3.49B-398.77M1.06B-383.70M380.29M
Operating Cash Flow4.04B221.06M1.72B378.26M922.10M
Investing Cash Flow-538.15M-667.97M-975.79M-778.97M-526.29M
Financing Cash Flow233.22M-633.15M-328.61M-51.97M106.09M

Watts Co., Ltd. Technical Analysis

Technical Analysis Sentiment
Negative
Last Price686.00
Price Trends
50DMA
708.36
Negative
100DMA
701.04
Negative
200DMA
692.45
Negative
Market Momentum
MACD
-5.49
Positive
RSI
41.92
Neutral
STOCH
28.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2735, the sentiment is Negative. The current price of 686 is below the 20-day moving average (MA) of 700.30, below the 50-day MA of 708.36, and below the 200-day MA of 692.45, indicating a bearish trend. The MACD of -5.49 indicates Positive momentum. The RSI at 41.92 is Neutral, neither overbought nor oversold. The STOCH value of 28.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:2735.

Watts Co., Ltd. Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
¥10.94B7.41
2.28%15.66%2.88%
76
Outperform
¥12.42B11.81
1.07%6.01%-21.51%
75
Outperform
¥8.85B12.27
4.45%1.96%4.38%
73
Outperform
¥11.05B8.03
1.46%0.43%2.70%
68
Neutral
¥197.01B21.388.29%2.28%4.93%0.72%
56
Neutral
¥12.49B
2.34%1.28%-449.59%
41
Neutral
¥8.06B
-10.64%-13.47%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:2735
Watts Co., Ltd.
680.00
-23.63
-3.36%
JP:3094
Super Value Co., Ltd.
634.00
-298.00
-31.97%
JP:3096
Ocean System Corporation
1,310.00
231.21
21.43%
JP:9846
Tenmaya Store Co., Ltd.
960.00
-71.53
-6.93%
JP:9890
Makiya Co., Ltd.
1,108.00
122.80
12.46%
JP:9993
Yamazawa Co., Ltd.
1,153.00
-89.33
-7.19%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 12, 2025