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

• Market Cap: ¥9.14B
• Dividend Yield: 2.96%
• Average Volume (3M): 31.20K
• Price to Earnings (P/E): 9.3
• Beta (1Y): <0.01
• Revenue Growth: 2.42%
• EPS Growth: 154.96%
• Country: JP
• Employees: 436
• Sector: Consumer Defensive
• Sector Strength: 56
• Industry: Grocery Stores
• EPS (TTM): 76.31
• Shares Outstanding: 13,458,800
• 10 Day Avg. Volume: 28,750
• 30 Day Avg. Volume: 31,196
• PEG Ratio: -0.49
• Price to Book (P/B): 0.70
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -20.96
• 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

• Rating: 77 Outperform
• Price Target: ¥801.00 ▲(14.59%Upside)

Watts Co., Ltd. demonstrates strong financial performance and attractive valuation, with significant improvements in cash flow management and a stable balance sheet. Despite potential short-term market volatility indicated by technical analysis, the stock's undervaluation and dividend yield offer a compelling investment opportunity.

Watts Co., Ltd. Business Overview & Revenue Model

Company Description

Watts Co., Ltd. is a Japanese company engaged in the retail sector, primarily focusing on the operation of 100-yen shops. Established in Japan, it offers a wide range of affordable everyday products, including household goods, food items, and lifestyle accessories. The company is committed to providing value to its customers through a diverse lineup of products that cater to various daily needs.

How the Company Makes Money

Watts Co., Ltd. generates revenue primarily through the operation of its 100-yen shops, where it sells a variety of products at a fixed price point. The company's revenue streams include direct sales from its retail stores spread across Japan and overseas. Additionally, Watts Co., Ltd. benefits from strategic partnerships and supplier relationships that allow it to offer a wide range of products at competitive prices. The company's earnings are further supported by its ability to efficiently manage its supply chain and maintain a high turnover of inventory, ensuring steady sales and profitability.

Watts Co., Ltd. Financial Statement Overview

Summary

Watts Co., Ltd. demonstrates strong financial health with significant improvements in revenue and profitability metrics. The stable balance sheet and enhanced cash flow management position it well for future growth.

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	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	61.44B	61.26B	59.31B	58.35B	50.70B	52.80B
Gross Profit	23.74B	23.59B	22.45B	22.28B	19.63B	20.22B
EBITDA	1.70B	1.97B	1.10B	1.68B	1.97B	1.52B
Net Income	1.00B	904.15M	250.58M	781.18M	965.83M	774.38M
Balance Sheet
Total Assets	20.88B	30.28B	25.49B	25.60B	21.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	5.15B	9.38B	5.65B	6.69B	6.17B	6.59B
Total Debt	1.50B	3.28B	2.88B	3.01B	1.12B	1.25B
Total Liabilities	10.90B	17.76B	13.52B	13.67B	10.12B	11.06B
Stockholders Equity	10.19B	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: 699.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 699 is below the 20-day moving average (MA) of 702.55, below the 50-day MA of 714.88, and below the 200-day MA of 699.48, indicating a neutral trend. The MACD of -1.71 indicates Negative momentum. The RSI at 52.36 is Neutral, neither overbought nor oversold. The STOCH value of 82.22 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
9890	79 Outperform	¥10.48B	7.01		2.38%	15.66%	2.88%
2735	77 Outperform	¥9.14B	9.29		2.96%	2.42%	154.96%
3096	76 Outperform	¥12.02B	11.45		1.10%	6.01%	-21.51%
9846	70 Outperform	¥11.03B	6.97		1.46%	0.19%	32.51%
Sector *	65 Neutral	$27.25B	15.35	-4.01%	3.14%	1.00%	1.98%
9993	54 Neutral	¥12.74B	―		2.31%	0.65%	-679.30%
3094	41 Neutral	¥9.26B	―		―	-5.60%	-23.60%