NAFCO Co., Ltd. (2790) AI Stock Analysis

• Market Cap: ¥63.09B
• Dividend Yield: 2.78%
• Average Volume (3M): 9.02K
• Price to Earnings (P/E): 19.8
• Beta (1Y): 0.50
• Revenue Growth: -6.21%
• EPS Growth: -29.75%
• Country: JP
• Employees: 1,324
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Home Improvement
• EPS (TTM): 28.14
• Shares Outstanding: 29,784,400
• 10 Day Avg. Volume: 8,530
• 30 Day Avg. Volume: 9,020
• PEG Ratio: -2.76
• Price to Book (P/B): 0.31
• Price to Sales (P/S): 0.26
• P/FCF Ratio: -7.47
• 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: 55 Neutral
• Price Target: ¥2,296.00 ▲(3.28% Upside)
• Action: Reiterated Date: 10/23/25
• Date: Action: Reiterated 10/23/25

NAFCO Co., Ltd. is currently facing significant financial challenges, with declining revenues and negative cash flows impacting its financial health. The technical indicators suggest a neutral to bearish outlook, while the negative P/E ratio raises valuation concerns. The dividend yield offers some compensation to investors, but overall, the stock is under pressure due to operational and financial inefficiencies.

Positive Factors

Conservative capital structure

NAFCO's low leverage and high equity ratio give durable financial flexibility. With limited debt service needs, the company can better absorb retail cyclicality, fund targeted store or logistical investments, and avoid refinancing stress, supporting operational stability over the next several quarters.

Broad retail assortment and essential demand

A wide range of home‑improvement and everyday household categories provides structural resilience versus niche retailers. Essential and recurring product demand plus cross‑selling across categories helps stabilize revenues, smooth seasonality, and preserve customer traffic across economic cycles.

Healthy gross profit margin

A ~34% gross margin supplies structural capacity to cover SG&A and invest in merchandising, private label or logistics. That margin buffer allows the company to pursue efficiency programs or mix shifts to recover operating profit over time even if near‑term net margins are compressed.

Negative Factors

Sustained revenue decline

A multi‑year drop in top line reduces scale benefits and purchasing leverage. Falling revenue impairs fixed‑cost absorption, limits funds for store upgrades or omnichannel investments, and makes it harder to restore growth absent strategic changes to assortment, pricing or distribution.

Negative operating and free cash flow

Negative operating and free cash flow signal weak cash generation from core retail operations. Persistent cash deficits constrain capex, inventory investment and payouts, increasing reliance on reserves or external financing and reducing room to execute strategic turnaround measures.

Compressed net profitability and low ROE

Near‑zero net margins and ROE reflect structural profitability issues and operational inefficiencies. Low returns hinder reinvestment capacity and make it difficult to attract capital, while persistent margin compression raises the bar for management to deliver sustainable improvements.

NAFCO Co., Ltd. Business Overview & Revenue Model

Company Description

NAFCO Co., Ltd. operates a chain of home and furniture retail outlets in Japan. The company's furniture/home fashion stores offer kitchen and dining, living room, bed and bedroom, study room, and wedding gift furniture; and bedding products, small furniture, and other items. It also operates home centers that offer DIY hardware, gardening products, exterior and interior furnishings, automobile accessories, and pet goods. In addition, the company operates combination stores that provide general furniture, interior and furnishings, DIY hardware, gardening merchandise, automobile and car accessories, and pet goods. As of March 31, 2022, it operated 359 stores. The company was founded in 1947 and is headquartered in Kitakyushu, Japan.

How the Company Makes Money

NAFCO primarily makes money through retail sales of merchandise to consumers at its stores. Revenue is generated by selling a wide range of home-related and daily-life products (e.g., DIY/home improvement items, household consumables and goods, furniture/interior products, and other lifestyle merchandise), with earnings driven by customer traffic, sales volume, and product mix (including higher-margin categories such as certain private-label or proprietary products if applicable; null). Additional monetization mechanisms commonly used by retailers—such as promotional campaigns, seasonal assortments, and inventory/merchandising optimization—can influence sales and gross margin, but specific details on NAFCO’s category breakdown, private-label contribution, e-commerce revenue, services (e.g., installation/delivery), or material partnerships are not available here and are therefore null.

NAFCO Co., Ltd. Financial Statement Overview

Summary

NAFCO Co., Ltd. is facing declining revenues and profitability, with significant challenges in operational efficiency and cash flow generation. Despite a strong balance sheet with low leverage, the negative operating and free cash flows in 2025 highlight potential liquidity issues.

Income Statement

NAFCO Co., Ltd. has experienced declining revenue over recent years, with total revenue decreasing from ¥234.58 billion in 2021 to ¥181.85 billion in 2025. The gross profit margin for 2025 is approximately 34.15%, indicating reasonable profitability within the industry. However, the net profit margin has decreased significantly to around 0.10% in 2025, reflecting reduced net income. The declining EBIT and EBITDA margins highlight challenges in operational efficiency and profit generation.

Balance Sheet

The company's balance sheet shows a stable equity position, with a debt-to-equity ratio of 0.16 in 2025, which is quite conservative. The return on equity (ROE) has been decreasing, indicating lower profitability from shareholders' investments, standing at approximately 0.12% in 2025. The equity ratio remains healthy at about 68.36%, suggesting a strong reliance on equity over debt for financing.

Cash Flow

NAFCO Co., Ltd. has faced a significant decline in operating cash flow, turning negative in 2025 at -¥709 million, reflecting operational challenges. Free cash flow has also turned negative in 2025, indicating potential liquidity issues. The free cash flow to net income ratio is negative, showing inefficiencies in cash generation from operations.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	180.22B	181.85B	192.45B	202.64B	206.88B	234.58B
Gross Profit	59.11B	55.74B	59.47B	64.06B	66.15B	74.87B
EBITDA	7.66B	7.63B	11.11B	15.15B	17.99B	24.08B
Net Income	-14.00M	183.00M	3.11B	5.64B	7.96B	11.69B
Balance Sheet
Total Assets	225.39B	226.50B	233.54B	239.70B	234.34B	237.44B
Cash, Cash Equivalents and Short-Term Investments	18.88B	18.50B	33.00B	36.12B	34.11B	40.98B
Total Debt	23.17B	24.81B	24.07B	23.22B	24.24B	24.79B
Total Liabilities	71.38B	72.54B	74.18B	77.89B	76.58B	84.61B
Stockholders Equity	154.01B	153.96B	159.36B	161.81B	157.76B	152.82B
Cash Flow
Free Cash Flow	0.00	-6.34B	4.00B	6.26B	-2.43B	20.75B
Operating Cash Flow	0.00	-709.00M	9.17B	9.66B	1.18B	24.78B
Investing Cash Flow	0.00	-5.95B	-4.93B	-3.43B	-3.50B	-3.50B
Financing Cash Flow	0.00	-7.84B	-7.36B	-4.22B	-4.56B	-4.49B

NAFCO Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2223.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2790, the sentiment is Neutral. The current price of 2223 is below the 20-day moving average (MA) of 2278.70, below the 50-day MA of 2240.44, and above the 200-day MA of 1996.82, indicating a neutral trend. The MACD of 3.57 indicates Positive momentum. The RSI at 38.97 is Neutral, neither overbought nor oversold. The STOCH value of 16.52 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:2790.

NAFCO Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3050	73 Outperform	¥220.49B	16.88	―	2.83%	1.49%	-21.76%
3191	68 Neutral	¥124.61B	8.26	―	3.43%	0.73%	-9.78%
8218	67 Neutral	¥173.21B	11.31	―	1.58%	1.69%	3.90%
7516	67 Neutral	¥130.87B	12.62	―	2.85%	3.83%	7.24%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
2790	55 Neutral	¥63.09B	19.77	0.36%	2.78%	-6.21%	-29.75%
9903	55 Neutral	¥5.99B	2,084.89	―	2.33%	-1.54%	―

NAFCO Co., Ltd. Corporate Events

NAFCO Boosts Quarterly Profit Despite Revenue Decline, Keeps Dividend Outlook Unchanged

NAFCO Co., Ltd. reported consolidated operating revenues of ¥137.2 billion for the quarter ended December 2025, a 4.6% year-on-year decline, but significantly improved profitability, with operating profit up 33.7% to ¥3.0 billion, ordinary profit up 26.7% to ¥2.9 billion, and net profit up 33.3% to ¥1.5 billion, lifting basic earnings per share to ¥61.21. Despite slightly lower sales, the company’s strong cost control and operational efficiency have supported higher margins while maintaining a robust financial position—total assets and net assets remained essentially flat and the capital adequacy ratio held at 68.4%—and NAFCO continues its shareholder returns policy with an unchanged annual dividend forecast of ¥58 per share for the fiscal year ending March 2026.

The most recent analyst rating on (JP:2790) stock is a Hold with a Yen2108.00 price target. To see the full list of analyst forecasts on NAFCO Co., Ltd. stock, see the JP:2790 Stock Forecast page.