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

• Market Cap: ¥8.85B
• Dividend Yield: 4.45%
• Average Volume (3M): 50.49K
• Price to Earnings (P/E): 12.3
• Beta (1Y): -0.02
• Revenue Growth: 1.96%
• EPS Growth: 4.38%
• Country: JP
• Employees: 436
• Sector: Consumer Defensive
• Sector Strength: 54
• Industry: Grocery Stores
• EPS (TTM): 4.22
• Shares Outstanding: 13,458,800
• 10 Day Avg. Volume: 87,090
• 30 Day Avg. Volume: 50,486
• PEG Ratio: -138.18
• Price to Book (P/B): 0.71
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: ¥766.00
• Price Target Upside: 11.66% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 75 Outperform
• 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. Business Overview & Revenue Model

Company Description

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

Watts Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 686.00
• 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: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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9890	79 Outperform	¥10.94B	7.41		2.28%	15.66%	2.88%
3096	76 Outperform	¥12.42B	11.81		1.07%	6.01%	-21.51%
2735	75 Outperform	¥8.85B	12.27		4.45%	1.96%	4.38%
9846	73 Outperform	¥11.05B	8.03		1.46%	0.43%	2.70%
Sector *	68 Neutral	¥197.01B	21.38	8.29%	2.28%	4.93%	0.72%
9993	56 Neutral	¥12.49B	―		2.34%	1.28%	-449.59%
3094	41 Neutral	¥8.06B	―		―	-10.64%	-13.47%