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

• Market Cap: ¥40.55B
• Dividend Yield: 1%
• Average Volume (3M): 94.77K
• Price to Earnings (P/E): 17.2
• Beta (1Y): 0.38
• Revenue Growth: 6.41%
• EPS Growth: -35.96%
• Country: JP
• Employees: 1,621
• Sector: Consumer Cyclical
• Sector Strength: 81
• Industry: Restaurants
• EPS (TTM): 9.59
• Shares Outstanding: 42,684,880
• 10 Day Avg. Volume: 117,900
• 30 Day Avg. Volume: 94,766
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: ¥1,066.00
• Price Target Upside: 6.71% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 61 Neutral
• Price Target: ¥1,066.00 ▲(6.71% Upside)

Watami Co., Ltd. receives a score of 61, driven primarily by strong financial performance, particularly in revenue growth and profitability. However, technical analysis indicates bearish momentum, and valuation metrics suggest the stock is fairly valued. Concerns about leverage and cash flow stability also weigh on the overall score.

Watami Co., Ltd. Business Overview & Revenue Model

Company Description

Watami Co., Ltd. (7522) is a Japanese company primarily engaged in the food service industry. The company operates a diverse range of businesses including restaurant chains, nursing care services, and renewable energy. Watami is best known for its izakaya-style restaurants, which offer a variety of Japanese cuisine and dining experiences. The company also extends its services to meal delivery, catering to senior citizens and households, reflecting its commitment to adapting to demographic changes in Japan.

How the Company Makes Money

Watami Co., Ltd. generates revenue through multiple streams primarily centered around its food service operations. The company earns a significant portion of its income from its network of restaurants, which include popular chains offering Japanese cuisine. Additionally, Watami has expanded into meal delivery services, providing convenient dining options to individuals and families, which has become a growing segment of its business. Beyond food services, Watami also derives income from its nursing care operations, where it offers care facilities and services for the elderly. Furthermore, the company has ventured into the renewable energy sector, although this remains a smaller part of its overall revenue. Strategic partnerships and a focus on sustainability and social responsibility have also been integral to Watami's business model, helping to enhance its brand value and market reach.

Watami Co., Ltd. Financial Statement Overview

Summary

Watami Co., Ltd. demonstrates strong revenue growth and profitability, with a notable 78.7% increase in revenue. However, concerns about leverage and cash flow stability persist, with a high debt-to-equity ratio and declining free cash flow growth.

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	89.41B	88.71B	82.30B	77.92B	64.36B	60.85B
Gross Profit	50.41B	50.24B	47.93B	43.61B	34.64B	31.26B
EBITDA	5.93B	7.41B	6.55B	4.27B	933.00M	-8.57B
Net Income	2.33B	3.52B	4.19B	1.67B	-1.84B	-11.56B
Balance Sheet
Total Assets	66.78B	71.49B	64.15B	57.05B	52.22B	44.89B
Cash, Cash Equivalents and Short-Term Investments	42.42B	46.13B	40.64B	35.71B	30.83B	20.40B
Total Debt	27.17B	29.08B	27.37B	24.68B	25.02B	26.60B
Total Liabilities	41.27B	44.35B	41.99B	39.24B	37.59B	41.50B
Stockholders Equity	25.17B	26.80B	21.89B	17.68B	14.47B	3.24B
Cash Flow
Free Cash Flow	5.35B	5.52B	2.55B	4.56B	-1.18B	-7.18B
Operating Cash Flow	7.06B	6.89B	4.74B	6.68B	1.02B	-4.32B
Investing Cash Flow	-5.33B	-6.56B	-3.06B	-4.99B	-15.37B	-3.41B
Financing Cash Flow	-835.00M	-13.00M	59.00M	-1.54B	10.10B	11.64B

Watami Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 999.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 Neutral. The current price of 999 is below the 20-day moving average (MA) of 1018.40, below the 50-day MA of 1016.50, and below the 200-day MA of 1010.11, indicating a bearish trend. The MACD of -7.71 indicates Positive momentum. The RSI at 46.86 is Neutral, neither overbought nor oversold. The STOCH value of 54.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7522.

Watami Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3198	67 Neutral	¥49.37B	35.33		1.20%	2.95%	-17.77%
2705	67 Neutral	¥40.54B	34.07		0.18%	13.81%	-14.64%
8163	67 Neutral	¥53.22B	61.19		0.59%	14.44%	-55.16%
3196	66 Neutral	¥44.00B	74.19		0.64%	14.82%	-65.01%
Sector *	61 Neutral	$17.92B	12.81	-2.97%	2.98%	1.30%	-14.28%
7522	61 Neutral	¥40.55B	17.22		1.00%	6.41%	-35.96%
CHMOF	―	$280.23M	<0.01	19.62%	―	―	―

Watami Co., Ltd. Corporate Events

Watami Co., Ltd. Reports Q1 2025 Financial Results Amid Global Uncertainties

Watami Co., Ltd. reported its financial results for the three months ended June 30, 2025, showing a slight increase in net sales by 3.3% to ¥22,112 million. However, the company faced a significant decline in profits, with ordinary profit dropping by 69% and profit attributable to owners decreasing by 70.5%. The company has expanded its scope of consolidation by including two new companies, Watami US Franchise LLC and H&W Hospitality Partners, LLC, indicating a strategic move to broaden its international footprint. Despite the challenges, Watami is navigating uncertainties in the global economy, including geopolitical tensions and tariff policies, which have impacted its ability to forecast future earnings.

Watami Co., Ltd. Reports Financial Results of Affiliate Keniten Co., Ltd.

Watami Co., Ltd. has announced the financial results of its affiliated company, Keniten Co., Ltd., for the fiscal year ending March 31, 2025. Keniten, which underwent a name change in May 2025, reported total assets and liabilities of 36,851 million yen, with a notable voting rights ratio held by Watami at 24.41%. This financial disclosure provides insights into Watami’s strategic financial interests and its impact on the company’s asset management operations.

Watami Ensures Independence Amid Shareholder Relations

Watami Co., Ltd. has announced that Keniten Co., Ltd., an affiliated company holding 24.41% of its voting rights, ensures Watami’s operational independence without imposing any restrictions on business activities. Watami maintains a policy to conduct transactions with controlling shareholders on terms comparable to third parties, ensuring no disadvantage to minority shareholders.

Watami Co., Ltd. Announces Board of Directors Candidates

Watami Co., Ltd. has announced the candidates for its Board of Directors, with reappointments of key figures including Miki Watanabe as Representative Director, Chairman, President, and CEO. The company also introduces Toshiya Ito as a newly appointed Outside Director and member of the Audit and Supervisory Committee, indicating a strategic move to strengthen its governance structure.