Kohnan Shoji Co., Ltd. (7516) AI Stock Analysis

• Market Cap: ¥133.70B
• Dividend Yield: 2.85%
• Average Volume (3M): 50.49K
• Price to Earnings (P/E): 9.0
• Beta (1Y): 0.44
• Revenue Growth: 3.83%
• EPS Growth: 7.24%
• Country: JP
• Employees: 4,806
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Home Improvement
• EPS (TTM): 77.81
• Shares Outstanding: 34,682,114
• 10 Day Avg. Volume: 48,950
• 30 Day Avg. Volume: 50,490
• PEG Ratio: 1.86
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 46.64
• 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: 67 Neutral
• Price Target: ¥4,617.00 ▲(18.84% Upside)
• Action: Reiterated Date: 06/19/25
• Date: Action: Reiterated 06/19/25

The stock is supported by a strong valuation due to its low P/E ratio and attractive dividend yield. Financial performance is solid, though attention is needed for cash flow management and leverage. Technical analysis suggests a cautious outlook, with no clear momentum.

Positive Factors

High gross profit margin

A 39.19% gross margin signals durable pricing power and favorable product mix in home improvement retail. Healthy gross margins provide a buffer against input cost swings, support reinvestment in stores or private-label expansion, and underpin sustainable operating profitability over months.

Consistent revenue and EPS growth

Steady top-line growth and mid-single-digit EPS gains demonstrate ongoing demand and execution across the store network. Persistent revenue expansion supports scale benefits, inventory turnover improvements and the potential to leverage fixed costs for margin recovery over a multi-month horizon.

Strong operating cash conversion and ROE

Operating cash generation exceeding reported earnings and an 8.57% ROE indicate the business converts profits into cash and uses equity effectively. This supports ongoing operations, dividend capacity and selective reinvestment, providing financial resilience across business cycles.

Negative Factors

Sharp free cash flow decline

A 40% fall in free cash flow is a meaningful structural concern: it reduces internal funding for capex, dividends or strategic initiatives and increases reliance on external financing. Over a 2-6 month horizon this can constrain growth projects and heighten liquidity sensitivity.

Moderate leverage on the balance sheet

Debt-to-equity of 1.17 and an equity ratio near 34.6% indicate meaningful leverage that limits financial flexibility. If earnings stagnate or cash flow weakens, interest and principal obligations could force cutbacks in investment or dividends, amplifying downside over months.

Thin and softening operating margins

A sub-5% EBIT margin and low net margin compress the company's ability to absorb cost inflation or invest in growth. Declining EBIT suggests operational efficiency pressure; sustained narrow margins reduce capacity to deleverage or fund strategic initiatives over the medium term.

Kohnan Shoji Co., Ltd. Business Overview & Revenue Model

Company Description

Kohnan Shoji Co., Ltd. operates and manages a chain of home center stores that offer DIY products and household goods to general consumers and professionals in Japan. Its home center stores offer home improvement products, which include lumber, building materials, tools, hardware, pain supplies, working clothes and equipment, gardening tools and equipment, plants, material handling products, housing and plumbing supplies, and remodeling and renovating products; housekeeping products, such as electrical appliance, kitchenware and dining, furniture and decor, bedding, electronics and lighting, household supply, health and personal care, footwear, clothing, cleaning, and laundry products; and car and leisure products, including automotive supplies and accessories, pet supplies, stationary and office supplies, cycling products, and sports and outdoor products. The company also operates Homestock store, a discount and convenient home center that offer approximately 22,000 items to consumers; and KOHNAN PRO stores, which sell various tools, building materials, paint supplies, and working equipment for professional customers. As of February 29, 2020, it operated 453 shops primarily in the Kinki area. The company was founded in 1978 and is headquartered in Osaka, Japan.

How the Company Makes Money

Kohnan Shoji generates revenue primarily through the sale of home improvement and gardening products in its retail stores. The company's revenue model is based on direct retail sales, which include a diverse range of items from tools and construction materials to gardening supplies and home decor. Key revenue streams also include sales from seasonal products and promotional items that align with customer needs throughout the year. Additionally, Kohnan Shoji may benefit from partnerships with suppliers and manufacturers, allowing for exclusive product offerings and potentially better pricing strategies. The company’s extensive store network and focus on customer service enhance its ability to attract and retain customers, further contributing to its earnings.

Kohnan Shoji Co., Ltd. Financial Statement Overview

Summary

The company shows strong revenue growth and stable profitability, with a robust balance sheet. However, a significant decrease in free cash flow and moderate leverage may pose risks. Management should focus on improving operational efficiencies and optimizing cash flow.

Income Statement

The company has demonstrated consistent revenue growth, with a notable increase of 6.08% in the most recent year. Gross profit margin stands at 39.19%, indicating strong profitability from core operations. Despite a slight decline in EBIT margin to 4.99%, the company maintains a solid EBITDA margin of 8.11%. Net profit margin is stable at 2.83%, reflecting efficient cost management. Overall, the income statement shows a healthy growth trajectory and profitability, though there is room for improvement in operational efficiencies.

Balance Sheet

The debt-to-equity ratio is 1.17, suggesting moderate leverage. Return on Equity (ROE) is 8.57%, indicating effective use of equity. The equity ratio of 34.61% shows a balanced capital structure. While the company has a healthy equity position, the moderate leverage might pose risks if earnings do not grow at a similar pace. Overall, the balance sheet reflects stability with potential leverage risks.

Cash Flow

The free cash flow has decreased significantly, showing a drop of 40.37%, which raises concerns about cash generation capabilities. The operating cash flow to net income ratio is 1.58, indicating that operating cash flow is greater than net income, a positive sign. However, the free cash flow to net income ratio is only 0.16, reflecting significant capital expenditures. The cash flow analysis highlights potential cash management issues despite strong operational cash generation.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	509.84B	501.40B	472.65B	439.02B	441.22B	442.07B
Gross Profit	199.63B	196.57B	187.12B	175.72B	176.01B	175.78B
EBITDA	40.70B	40.69B	39.07B	36.19B	39.52B	42.72B
Net Income	13.71B	14.21B	14.05B	13.23B	15.59B	18.65B
Balance Sheet
Total Assets	496.22B	479.01B	458.56B	419.25B	398.08B	395.10B
Cash, Cash Equivalents and Short-Term Investments	14.49B	10.84B	11.72B	9.22B	12.24B	14.68B
Total Debt	193.17B	193.19B	184.10B	158.80B	147.38B	147.06B
Total Liabilities	324.42B	313.21B	301.30B	269.70B	255.63B	261.81B
Stockholders Equity	171.81B	165.79B	157.26B	149.55B	142.44B	133.28B
Cash Flow
Free Cash Flow	0.00	2.23B	3.74B	-6.22B	6.35B	20.31B
Operating Cash Flow	0.00	22.44B	22.49B	9.40B	17.44B	35.12B
Investing Cash Flow	0.00	-21.72B	-24.01B	-17.93B	-12.68B	-15.22B
Financing Cash Flow	0.00	-1.43B	2.50B	5.43B	-7.29B	-17.20B

Kohnan Shoji Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3885.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7516, the sentiment is Positive. The current price of 3885 is below the 20-day moving average (MA) of 4035.75, below the 50-day MA of 3999.10, and below the 200-day MA of 3893.51, indicating a bullish trend. The MACD of 77.55 indicates Negative momentum. The RSI at 72.10 is Negative, neither overbought nor oversold. The STOCH value of 69.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7516.

Kohnan Shoji Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3050	73 Outperform	¥237.24B	13.62	―	2.83%	1.49%	-21.76%
3191	68 Neutral	¥130.76B	13.39	―	3.43%	0.73%	-9.78%
8218	67 Neutral	¥180.34B	12.16	―	1.58%	1.69%	3.90%
7516	67 Neutral	¥133.70B	9.03	―	2.85%	3.83%	7.24%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
3199	58 Neutral	¥30.06B	14.66	―	1.66%	1.84%	-14.00%
2790	55 Neutral	¥65.41B	100.71	0.41%	2.78%	-6.21%	-29.75%

Kohnan Shoji Co., Ltd. Corporate Events

Kohnan Shoji Cuts Full-Year Earnings Forecast on Weak Consumer Sentiment

Kohnan Shoji has revised downward its consolidated earnings forecast for the fiscal year ending February 2026, cutting projected operating revenue from ¥523.6 billion to ¥516.6 billion and lowering expected operating profit by 17.0% to ¥21.25 billion, with profit attributable to owners of the parent reduced to ¥12.0 billion and earnings per share to ¥422.99. Despite increased sales from new stores and stronger demand for its PRO product lineup, daily necessities, food, and home appliances, the company cites weaker-than-expected consumer sentiment amid price increases and limited ability to pass on higher costs as key reasons for missing its initial sales and profit targets, while noting that recent share acquisitions will have only a minor effect on this year’s consolidated results.

The most recent analyst rating on (JP:7516) stock is a Hold with a Yen4047.00 price target. To see the full list of analyst forecasts on Kohnan Shoji Co., Ltd. stock, see the JP:7516 Stock Forecast page.

Kohnan Shoji Posts Revenue Growth but Profit Decline, Raises Dividend Forecast

For the nine months ended November 30, 2025, Kohnan Shoji reported operating revenues of ¥391.1 billion, up 3.3% year on year, but saw profitability weaken, with operating profit down 11.0% to ¥18.5 billion and profit attributable to owners of parent falling 6.7% to ¥10.9 billion; earnings per share declined to ¥383.58 amid a lower equity ratio and a rise in total assets. Despite this margin pressure, the company is maintaining a shareholder‑friendly stance, lifting its annual dividend forecast to ¥130 per share for the fiscal year ending February 28, 2026, even as it projects full‑year operating profit and net profit to drop by about 15%, signaling a cautious earnings outlook but continued commitment to capital returns and balance‑sheet expansion through increased treasury share holdings.

The most recent analyst rating on (JP:7516) stock is a Hold with a Yen4047.00 price target. To see the full list of analyst forecasts on Kohnan Shoji Co., Ltd. stock, see the JP:7516 Stock Forecast page.