Karula Co., Ltd. (2789) AI Stock Analysis

• Market Cap: ¥2.80B
• Dividend Yield: 1.01%
• Average Volume (3M): 3.87K
• Price to Earnings (P/E): 9.0
• Beta (1Y): 0.09
• Revenue Growth: 5.70%
• EPS Growth: -12.36%
• Country: JP
• Employees: 249
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 2.96
• Shares Outstanding: 6,021,112
• 10 Day Avg. Volume: 4,240
• 30 Day Avg. Volume: 3,873
• PEG Ratio: -0.52
• Price to Book (P/B): 1.29
• Price to Sales (P/S): 0.35
• P/FCF Ratio: 8.53
• 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): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Neutral
• Price Target: ¥511.00 ▲(7.35% Upside)
• Action: Downgraded Date: 10/07/25
• Date: Action: Downgraded 10/07/25

Karula Co., Ltd. demonstrates a strong financial recovery with efficient cost management and operational improvements. The stock's valuation suggests it may be undervalued, offering potential upside. However, technical indicators show a neutral trend, and challenges in free cash flow and net income need addressing.

Positive Factors

Revenue Growth

Consistent revenue growth indicates a strong market position and effective business strategies, supporting long-term expansion.

Operational Efficiency

Improved EBIT and EBITDA margins reflect enhanced operational efficiency, which can sustain profitability over time.

Profitability

A strong ROE indicates effective use of equity capital, enhancing shareholder value and supporting long-term financial health.

Negative Factors

Free Cash Flow Decline

Declining free cash flow can limit the company's ability to invest in growth opportunities and meet debt obligations, impacting future stability.

Net Income Challenges

A decrease in net income suggests challenges in maintaining profitability, which could affect long-term financial performance.

Debt Levels

High debt levels can strain financial resources and limit flexibility, potentially impacting the company's ability to navigate economic changes.

Karula Co., Ltd. Business Overview & Revenue Model

Company Description

Karula Co.,LTD. operates Japanese style family restaurants in Japan. It operates stores in Tohoku and Northern Kanto region, including Japanese-style restaurant Marumatsu and Jushoan stores; crab restaurant Kani Masamune; pork cutlet restaurant Katsu Gourmet; Japanese soba restaurant Marumatsu; low-priced rice bowl/set meal restaurant Rara-tei; and other stores. The company was formerly known as Marumatsu Co., Ltd. and changed its name to Karula Co.,LTD. in March 1991. Karula Co.,LTD. was founded in 1910 and is headquartered in Tomiya, Japan.

How the Company Makes Money

Karula Co., Ltd. generates revenue through multiple streams, including the sale of its proprietary medical devices and diagnostic products to healthcare institutions, hospitals, and clinics. The company also engages in partnerships with other biotech firms and pharmaceutical companies, allowing it to co-develop products and share in the revenue generated from these collaborations. Additionally, Karula Co., Ltd. invests in research and development to create new products, which can lead to licensing agreements and royalties, further enhancing its revenue potential. The focus on innovative and high-demand healthcare solutions positions the company to capitalize on market growth and evolving healthcare needs.

Karula Co., Ltd. Financial Statement Overview

Summary

Karula Co., Ltd. has shown a commendable recovery in its financial performance with strong margins and revenue growth. The income statement indicates efficient cost management and improved operational efficiency. However, the decline in free cash flow and net income highlights areas for improvement.

Income Statement

Karula Co., Ltd. has shown a strong recovery in its income statement metrics. The gross profit margin for the latest year is approximately 68.5%, indicating efficient cost management. The net profit margin improved to 5.0% from a negative margin two years ago, reflecting a turnaround in profitability. Revenue growth rate is 6.2%, demonstrating steady top-line growth. EBIT and EBITDA margins are 5.0% and 7.9% respectively, highlighting improved operational efficiency. However, the net income has decreased compared to the previous year, suggesting potential challenges in maintaining profitability.

Balance Sheet

The balance sheet of Karula Co., Ltd. shows a moderate financial position. The debt-to-equity ratio is 1.10, indicating a balanced leverage level. Return on equity (ROE) is 18.4%, which is a positive sign of profitability relative to shareholders' equity. The equity ratio stands at 39.4%, showing a reasonable proportion of equity financing. However, the company's total debt remains significant, which could pose a risk if not managed effectively.

Cash Flow

Karula Co., Ltd. has a stable cash flow position. The free cash flow growth rate is -27.8%, indicating a decline in free cash flow generation. The operating cash flow to net income ratio is 1.05, suggesting that the company is generating cash efficiently relative to its net income. The free cash flow to net income ratio is 0.82, which is healthy but shows a decline from the previous year. The company needs to focus on improving its free cash flow generation to support future growth and debt obligations.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	7.46B	7.26B	6.84B	6.04B	5.20B	5.29B
Gross Profit	5.20B	4.98B	4.83B	4.20B	3.61B	3.61B
EBITDA	503.97M	570.77M	520.43M	148.78M	-151.94M	-674.79M
Net Income	320.23M	363.31M	437.00M	-61.35M	-448.63M	-977.77M
Balance Sheet
Total Assets	5.61B	5.02B	5.58B	5.30B	5.62B	5.72B
Cash, Cash Equivalents and Short-Term Investments	1.41B	1.01B	1.56B	1.28B	1.30B	911.61M
Total Debt	2.35B	2.18B	3.02B	3.12B	3.49B	3.19B
Total Liabilities	3.41B	3.04B	3.93B	3.97B	4.21B	3.86B
Stockholders Equity	2.19B	1.98B	1.65B	1.34B	1.41B	1.85B
Cash Flow
Free Cash Flow	0.00	299.53M	414.86M	107.54M	45.03M	-789.44M
Operating Cash Flow	0.00	382.02M	504.03M	186.11M	127.41M	-682.48M
Investing Cash Flow	0.00	-55.68M	2.32M	45.05M	-31.71M	-39.63M
Financing Cash Flow	0.00	-868.89M	-223.11M	-369.17M	296.20M	1.05B

Karula Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 476.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2789, the sentiment is Negative. The current price of 476 is below the 20-day moving average (MA) of 481.74, below the 50-day MA of 484.97, and above the 200-day MA of 469.04, indicating a bearish trend. The MACD of -3.48 indicates Positive momentum. The RSI at 29.47 is Positive, neither overbought nor oversold. The STOCH value of 11.11 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:2789.

Karula Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3077	72 Outperform	¥3.89B	11.10	―	―	6.16%	86.76%
2789	70 Neutral	¥2.80B	9.03	―	1.01%	5.70%	-12.36%
138A	67 Neutral	¥2.87B	28.10	―	1.59%	11.33%	-21.04%
3372	66 Neutral	¥3.18B	11.75	―	―	4.50%	11.40%
3358	63 Neutral	¥5.30B	75.96	―	―	3.85%	-59.79%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
2762	46 Neutral	¥3.90B	-4.38	―	―	3.26%	4.62%