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

• Market Cap: ¥131.66B
• Dividend Yield: 2.85%
• Average Volume (3M): 50.49K
• Price to Earnings (P/E): 12.6
• Beta (1Y): 0.46
• 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): 547.5
• Revenue Forecast (FY): ¥545.00B

• Rating: 67 Neutral
• Price Target: ¥4,519.00 ▲(16.32% 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

Revenue Growth

Sustained top-line growth demonstrates steady customer demand and successful merchandising across core categories. Over 2-6 months this supports scale benefits, provides revenue base for margin improvement, and underpins investments in stores and inventory management.

High Gross Profit Margin

A near-40% gross margin provides durable pricing flexibility and a buffer against commodity and procurement cost swings. This structural margin strength supports reinvestment, private-label expansion and helps protect operating profits in a competitive home-improvement market.

Operating Cash Generation

Operating cash flow exceeding net income indicates high earnings quality and reliable cash generation from retail operations. This persistent cash conversion ability aids working capital, funds everyday capex, and supports operational resilience over the medium term.

Negative Factors

Free Cash Flow Decline

A >40% fall in free cash flow materially weakens financial flexibility and constrains capacity to fund dividends, deleveraging, or strategic investments without raising external capital. If persistent, it could hamper long-term growth initiatives and resilience.

Moderate Leverage

Debt-to-equity above 1.0 signals meaningful leverage for a retail operator, increasing interest and refinancing risk if earnings stall. This capital structure reduces room for cyclical downturns and can limit the firm's ability to invest without adding financial strain.

Thin Net & EBIT Margins

Relatively low EBIT and net margins leave limited capacity to absorb cost inflation or competitive pricing pressure common in retail. Persistent margin tightness restricts free cash flow upside and makes long-term profitability sensitive to operational disruptions.

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

The company primarily makes money by selling merchandise through its retail stores. Revenue is generated at the point of sale across multiple product categories such as DIY and renovation-related materials (e.g., building supplies, tools, hardware), household consumables and daily necessities, interior and home living goods, and garden/outdoor products. Earnings are driven by retail gross margin (the spread between procurement cost and selling price) and operating leverage from store traffic, merchandising, and inventory turnover. If applicable, additional contributions can come from private-label products (typically higher-margin than national brands), seasonal and promotion-led sales (e.g., gardening and outdoor demand), and services associated with home improvement retailing; specific details on service revenues, e-commerce contribution, or named partnerships are null.

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	196.18B	170.91B	159.52B	159.32B
Total Liabilities	324.41B	313.21B	301.30B	269.69B	255.63B	261.80B
Stockholders Equity	171.81B	165.79B	157.26B	149.56B	142.44B	133.29B
Cash Flow
Free Cash Flow	0.00	2.23B	4.50B	-5.12B	8.09B	20.70B
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: Positive
• RSI: Neutral
• 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 4193.95, below the 50-day MA of 4017.33, and above the 200-day MA of 3879.06, indicating a neutral trend. The MACD of 44.03 indicates Positive momentum. The RSI at 54.82 is Neutral, neither overbought nor oversold. The STOCH value of 56.74 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	¥223.65B	16.88	―	2.83%	1.49%	-21.76%
3191	68 Neutral	¥125.92B	8.26	―	3.43%	0.73%	-9.78%
8218	67 Neutral	¥174.93B	11.31	―	1.58%	1.69%	3.90%
7516	67 Neutral	¥131.66B	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	¥63.47B	19.77	0.36%	2.78%	-6.21%	-29.75%
9903	55 Neutral	¥5.96B	2,084.89	―	2.33%	-1.54%	―

Kohnan Shoji Co., Ltd. Corporate Events

Kohnan Shoji Overhauls Board and Executive Team Ahead of May 2026

Kohnan Shoji Co., Ltd. has announced a series of management changes, effective May 28, 2026, including the appointment of current outside corporate auditor Nao Matsukawa as a new outside director. The reshuffle reflects ongoing efforts to refresh the board structure while retaining governance continuity through internal promotion of experienced oversight personnel.

The company will also appoint Kenji Kajiwara, former president and executive officer of Senshukai Co., Ltd., as a new outside corporate auditor, while two current corporate auditors, including Akihiro Nomura, will retire at the end of their terms. In addition, Kohnan Shoji is strengthening its executive ranks by promoting managers from product planning, accounting, personnel, e-commerce sales, and logistics to senior executive officer and executive officer roles, signaling a focus on operational execution and strategic growth in key business functions.

The most recent analyst rating on (JP:7516) stock is a Hold with a Yen4494.00 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 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.