Araya Industrial Co., Ltd. (7305) AI Stock Analysis

• Market Cap: ¥24.98B
• Dividend Yield: 6%
• Average Volume (3M): 20.75K
• Price to Earnings (P/E): 13.4
• Beta (1Y): 0.64
• Revenue Growth: -5.76%
• EPS Growth: 56.13%
• Country: JP
• Employees: 480
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Steel
• EPS (TTM): 42.45
• Shares Outstanding: 6,045,326
• 10 Day Avg. Volume: 16,370
• 30 Day Avg. Volume: 20,746
• PEG Ratio: 0.39
• Price to Book (P/B): 0.78
• Price to Sales (P/S): 0.57
• P/FCF Ratio: 13.15
• 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: 69 Neutral
• Price Target: ¥5,338.00 ▲(6.55% Upside)

The overall stock score is driven by a strong financial foundation and attractive valuation, offset by bearish technical indicators. The company's solid balance sheet and high dividend yield are significant strengths, while the current market momentum suggests caution.

Positive Factors

Strong Financial Structure

Araya Industrial Co., Ltd. maintains a solid financial structure with low debt levels and a high equity ratio, providing stability and reducing financial risk.

Cash Generation Ability

The company shows strong cash generation relative to net income, indicating effective cash management and the ability to fund operations and investments.

Effective Shareholder Value Creation

A strong ROE indicates that the company is effectively using its equity base to generate profits, enhancing shareholder value over the long term.

Negative Factors

Revenue Growth Challenges

The decline in revenue suggests challenges in maintaining growth, which could impact the company's ability to expand market share and increase profitability.

Narrowing Profit Margins

The decline in profit margins indicates potential operational inefficiencies or increased costs, which could affect long-term profitability if not addressed.

Decreased Free Cash Flow

A significant decrease in free cash flow may limit the company's ability to invest in growth opportunities and could pressure financial flexibility.

Araya Industrial Co., Ltd. Business Overview & Revenue Model

Company Description

Araya Industrial Co., Ltd. manufactures and sells steel products in Japan and internationally. The company offers ordinary steel pipes, stainless steel pipes, special-shaped steel pipes, various sections, and precision parts for OA machines for use in automobiles, motorcycles, bicycles, construction, furniture products, industrial machinery, welfare equipment, and logistics equipment. It also offers suspensions for wheelchairs, wheel chairs, industrial absolex, and wing arms for toilet, as well as bicycles and rims. The company was founded in 1903 and is headquartered in Osaka, Japan.

How the Company Makes Money

Araya Industrial Co., Ltd. generates revenue primarily through the sale of its machinery and components to various sectors. The company's revenue model is based on direct sales, where it offers its products to manufacturers and businesses in need of high-quality industrial equipment. Key revenue streams include both domestic and international sales, with a significant portion of earnings derived from long-term contracts with large enterprises. Additionally, the company may benefit from after-sales services such as maintenance, training, and technical support, which provide recurring revenue opportunities. Strategic partnerships with other manufacturers and suppliers can also enhance its market reach and contribute positively to its financial performance.

Araya Industrial Co., Ltd. Financial Statement Overview

Summary

Araya Industrial Co., Ltd. showcases a robust financial foundation with strengths in equity management and cash flow generation. However, challenges in revenue growth and profit margins indicate potential areas for improvement. The company maintains a conservative leverage position, minimizing financial risk.

Income Statement

The company demonstrates moderate revenue stability with fluctuations over the years, showing a decrease in revenue from the previous year by 3.84%. The Gross Profit Margin remains strong at approximately 18%, indicating efficient production processes. However, the declining Net Profit Margin from 5.56% last year to 4.97% this year suggests narrowing profitability. The EBIT Margin and EBITDA Margin also show slight declines, reflecting some operational challenges.

Balance Sheet

Araya Industrial Co., Ltd. maintains a solid financial structure with a healthy Debt-to-Equity Ratio of 0.18, showcasing prudent debt management. The Return on Equity (ROE) is strong at 6.84%, highlighting effective shareholder value creation. The Equity Ratio of 59.76% suggests a stable asset base funded largely by equity, providing a cushion against liabilities.

Cash Flow

The company's cash flow shows resilience with a positive Operating Cash Flow to Net Income Ratio of 1.28, indicating strong cash generation relative to net income. However, the Free Cash Flow decreased by 23.41% from last year, which could pressure future investments. The Free Cash Flow to Net Income Ratio remains healthy at 0.87, although it's down from the previous year, suggesting room for improvement in cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	42.27B	42.84B	44.56B	46.43B	40.76B	36.50B
Gross Profit	8.04B	7.72B	7.81B	10.43B	8.98B	6.21B
EBITDA	3.73B	3.82B	3.45B	5.50B	4.55B	2.41B
Net Income	2.11B	2.13B	1.69B	3.06B	2.57B	1.28B
Balance Sheet
Total Assets	52.89B	52.06B	58.19B	54.04B	52.52B	45.57B
Cash, Cash Equivalents and Short-Term Investments	6.93B	6.70B	9.60B	8.33B	8.14B	8.41B
Total Debt	7.15B	5.74B	5.90B	6.25B	6.62B	6.84B
Total Liabilities	21.80B	20.48B	22.18B	21.82B	23.68B	19.36B
Stockholders Equity	30.59B	31.11B	35.60B	31.86B	28.64B	26.03B
Cash Flow
Free Cash Flow	0.00	1.84B	2.41B	1.00B	294.00M	772.00M
Operating Cash Flow	0.00	2.73B	2.87B	2.07B	1.22B	2.31B
Investing Cash Flow	0.00	590.00M	-683.00M	-1.07B	-849.00M	-671.00M
Financing Cash Flow	0.00	-6.05B	-1.05B	-896.00M	-729.00M	-1.07B

Araya Industrial Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5010.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7305, the sentiment is Positive. The current price of 5010 is below the 20-day moving average (MA) of 5024.25, above the 50-day MA of 4859.00, and above the 200-day MA of 4769.30, indicating a bullish trend. The MACD of 112.78 indicates Negative momentum. The RSI at 86.95 is Negative, neither overbought nor oversold. The STOCH value of 93.53 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7305.

Araya Industrial Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7305	69 Neutral	¥24.98B	13.36	―	6.00%	-5.76%	56.13%
5484	68 Neutral	¥17.02B	17.19	―	1.71%	-4.31%	8.40%
5976	67 Neutral	¥39.98B	26.95	―	4.64%	-5.13%	18.49%
5632	66 Neutral	¥29.17B	9.71	―	4.13%	-2.96%	―
5408	64 Neutral	¥34.70B	8.28	―	5.02%	-13.64%	-45.74%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
5476	56 Neutral	¥8.19B	-1.16	―	―	3.22%	-451.22%