Watami Co., Ltd. (7522) AI Stock Analysis

• Market Cap: ¥39.29B
• Dividend Yield: 1.04%
• Average Volume (3M): 79.94K
• Price to Earnings (P/E): 10.2
• Beta (1Y): 0.43
• Revenue Growth: 5.47%
• EPS Growth: 61.89%
• Country: JP
• Employees: 1,621
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 27.26
• Shares Outstanding: 42,684,880
• 10 Day Avg. Volume: 62,400
• 30 Day Avg. Volume: 79,936
• PEG Ratio: -2.32
• Price to Book (P/B): 1.56
• Price to Sales (P/S): 0.47
• P/FCF Ratio: 7.58
• 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: 66 Neutral
• Price Target: ¥1,015.00 ▲(10.33% Upside)

Watami Co., Ltd. benefits from strong financial performance, particularly in revenue growth and profitability. Valuation metrics indicate the stock is undervalued, enhancing its attractiveness. However, technical indicators suggest potential short-term weakness, and significant debt levels require careful management.

Positive Factors

Revenue Growth

The company's significant revenue growth rate of 70.7% reflects robust sales rebound, indicating strong market demand and effective business strategies.

Profitability

Improved profitability margins suggest effective cost management and enhanced operational efficiency, contributing to long-term financial health.

Debt Management

Improved debt-to-equity ratio indicates better leverage management, enhancing financial stability and reducing risk exposure.

Negative Factors

Cash Flow Challenges

Decreasing free cash flow could constrain future investments and debt repayments, impacting long-term growth and financial flexibility.

Operating Efficiency

Declining EBIT and EBITDA margins suggest pressures on operating efficiency, which could affect profitability if not addressed.

Significant Debt Levels

High debt levels pose risks to financial stability and may limit the company's ability to respond to market changes or invest in growth opportunities.

Watami Co., Ltd. Business Overview & Revenue Model

Company Description

Watami Co., Ltd. (7522) is a prominent Japanese company primarily engaged in the food and beverage industry, notably operating a chain of izakaya (Japanese-style pubs) and restaurants. The company also delves into the retail sector by providing food products and services for home consumption. With a focus on delivering quality dining experiences and a diverse menu that includes traditional Japanese cuisine, Watami has established a strong presence in the domestic market.

How the Company Makes Money

Watami Co., Ltd. generates revenue primarily through its restaurant operations, which include a wide range of izakaya and other dining establishments across Japan. The company capitalizes on the growing demand for dining out and socializing, attracting customers with its unique offerings and ambiance. In addition to in-restaurant sales, Watami also earns income from catering services and food product sales, including packaged goods that are marketed for home consumption. The company may also benefit from strategic partnerships with suppliers and distributors, enhancing its supply chain efficiency and product offerings. Seasonal promotions and loyalty programs further contribute to customer retention and increased sales, helping to solidify Watami's position in the competitive food service industry.

Watami Co., Ltd. Financial Statement Overview

Summary

Watami Co., Ltd. shows strong revenue growth and profitability with a score of 85 in the income statement. However, concerns about leverage and cash flow stability, reflected in lower scores of 70 for the balance sheet and 60 for cash flow, moderate the overall financial performance score.

Income Statement

Watami Co., Ltd. has demonstrated strong revenue growth, particularly in the TTM period with a remarkable 78.7% increase. The company maintains healthy gross and net profit margins, indicating efficient cost management and profitability. However, the EBIT and EBITDA margins have shown some fluctuations, suggesting potential volatility in operating efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved over time, indicating better leverage management, but it remains relatively high, posing potential financial risk. Return on equity is strong, reflecting effective use of equity to generate profits. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Watami's cash flow performance is mixed, with a recent decline in free cash flow growth. The operating cash flow to net income ratio is moderate, indicating reasonable cash generation from operations. However, the free cash flow to net income ratio suggests that cash generation relative to profits could be improved.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	90.04B	88.71B	82.30B	77.92B	64.36B	60.85B
Gross Profit	50.55B	50.24B	47.93B	43.61B	34.64B	31.26B
EBITDA	6.39B	7.41B	6.55B	4.27B	933.00M	-8.57B
Net Income	3.80B	3.52B	4.19B	1.67B	-1.84B	-11.56B
Balance Sheet
Total Assets	67.79B	71.49B	64.15B	57.05B	52.22B	44.89B
Cash, Cash Equivalents and Short-Term Investments	40.59B	46.13B	40.64B	35.71B	30.83B	20.40B
Total Debt	25.42B	30.04B	27.37B	24.68B	25.02B	26.60B
Total Liabilities	41.59B	44.35B	41.99B	39.24B	37.59B	41.50B
Stockholders Equity	25.86B	26.80B	21.89B	17.68B	14.47B	3.24B
Cash Flow
Free Cash Flow	5.08B	5.52B	2.55B	4.56B	-1.18B	-7.18B
Operating Cash Flow	7.00B	6.89B	4.74B	6.68B	1.02B	-4.32B
Investing Cash Flow	-2.35B	-6.56B	-3.06B	-4.99B	-15.37B	-3.41B
Financing Cash Flow	-737.00M	-13.00M	59.00M	-1.54B	10.10B	11.64B

Watami Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 920.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7522, the sentiment is Positive. The current price of 920 is below the 20-day moving average (MA) of 954.55, below the 50-day MA of 938.26, and below the 200-day MA of 1003.42, indicating a neutral trend. The MACD of 6.71 indicates Negative momentum. The RSI at 57.69 is Neutral, neither overbought nor oversold. The STOCH value of 65.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7522.

Watami Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7522	66 Neutral	¥39.29B	10.20	―	1.04%	5.47%	61.89%
3561	66 Neutral	¥42.67B	21.32	18.06%	1.37%	4.01%	3.32%
2705	62 Neutral	¥42.28B	37.82	―	0.17%	15.53%	-26.93%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
3198	60 Neutral	¥48.14B	36.65	―	1.30%	2.90%	-26.37%
3196	59 Neutral	¥45.24B	51.50	―	0.62%	13.05%	-29.04%
8163	55 Neutral	¥50.37B	59.80	―	0.62%	17.12%	-58.47%

Watami Co., Ltd. Corporate Events

Watami Co., Ltd. Updates Shareholder Benefit Program for Enhanced Convenience

Watami Co., Ltd. announced changes to its shareholder benefit program, aiming to enhance convenience for its domestic restaurant business. The modifications include allowing one voucher per 2,000 yen bill and making vouchers usable during all operating hours, including lunch time, which could potentially increase shareholder engagement and support.

Watami Co., Ltd. Announces Earnings and Dividend Forecasts for FY 2026

Watami Co., Ltd. has announced its earnings and dividend forecasts for the fiscal year ending March 31, 2026, after previously withholding them due to global economic uncertainties. The company expects consolidated net sales of 91,000 million yen and a profit attributable to owners of the parent of 4,000 million yen. Additionally, Watami plans to maintain a stable dividend policy, forecasting a year-end dividend of 10 yen per share, reflecting its commitment to shareholder returns amidst performance trends.

Watami Co., Ltd. Reports Increased Sales and Profitability in Latest Financial Results

Watami Co., Ltd. reported its consolidated financial results for the six months ending September 30, 2025, showing a 3.1% increase in net sales compared to the previous year. Despite a slight decline in operating profit by 4.1%, the company saw a significant rise in ordinary profit and profit attributable to owners, indicating improved profitability. The company also announced revisions to its cash dividends and earnings forecasts, reflecting a positive outlook for the fiscal year ending March 31, 2026.