Tay Two Co., Ltd. (7610) AI Stock Analysis

• Market Cap: ¥9.40B
• Dividend Yield: 2.7%
• Average Volume (3M): 587.63K
• Price to Earnings (P/E): 10.4
• Beta (1Y): 0.80
• Revenue Growth: 7.21%
• EPS Growth: 411.30%
• Country: JP
• Employees: 391
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): 3.32
• Shares Outstanding: 68,664,340
• 10 Day Avg. Volume: 650,780
• 30 Day Avg. Volume: 587,630
• PEG Ratio: -1.52
• Price to Book (P/B): 1.26
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 16.62
• 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: 71 Outperform
• Price Target: ¥167.00 ▲(23.70% Upside)
• Action: Reiterated Date: 10/01/25
• Date: Action: Reiterated 10/01/25

Tay Two Co., Ltd. has a stable financial position with strong revenue growth and a solid balance sheet. The technical indicators suggest mixed momentum, with short-term bearish signals but long-term stability. The valuation is fair, offering a reasonable P/E ratio and dividend yield. The main areas for improvement are profitability and operational efficiency.

Positive Factors

Revenue Growth Trend

Sustained top-line expansion across five years and 3.64% growth into 2025 indicates durable market demand and successful product or channel execution. Reliable revenue growth underpins reinvestment capacity, supports scale economics, and reduces reliance on one-off gains for future performance.

Balance Sheet Strength

A solid equity ratio and modest leverage provide financial flexibility to fund capex, pursue strategic initiatives, and weather economic cycles. This capital structure supports durable operations, lowers refinancing risk, and preserves capacity for shareholder returns or opportunistic investments.

Improved Free Cash Flow

A material swing to positive FCF demonstrates improved cash generation and operational discipline. Strong operating cash conversion enhances self-funding of growth, allows debt reduction or dividends, and indicates the business can sustainably generate liquidity through its core retail operations.

Negative Factors

Very Low Net Profit Margin

A sub-2% net margin materially limits the firm's capacity to absorb cost inflation, invest in growth, or deliver meaningful shareholder returns. Persistently low net profitability suggests structural pressure on pricing, cost base, or elevated non-operating costs that require lasting operational fixes.

Declining Return on Equity

Falling ROE signals diminishing efficiency in deploying shareholders' capital and constrains long-term value creation. Unless management improves margin or asset turnover, the company may struggle to justify reinvestment rates or generate above-cost returns for equity holders over the medium term.

Earnings-to-Cash Conversion Gap

Although FCF turned positive, the noted gap between net income and cash conversion points to earnings quality or working capital dynamics that could re-emerge. Structural improvement in converting profits to cash is needed to ensure resilient funding for capex, dividends, or debt reduction.

Tay Two Co., Ltd. Business Overview & Revenue Model

Company Description

Tay Two Co., Ltd. purchases and sells books, home video games, trading cards, hobbies, smartphones, CDs, DVDs, clothing, etc. The company was founded in 1989 and is headquartered in Okayama, Japan.

Tay Two Co., Ltd. Financial Statement Overview

Summary

Tay Two Co., Ltd. shows strong revenue growth and solid financial stability, with a healthy balance sheet and improving cash flow. However, declining net profit margins and a decrease in return on equity suggest areas for improvement in profitability and efficiency.

Income Statement

Tay Two Co., Ltd. demonstrates strong revenue growth with a consistent increase over the past five years, culminating in a solid 3.64% growth from 2024 to 2025. The company's gross profit margin remains robust at 32.6% in 2025, indicating effective cost management. However, the net profit margin has seen a decline to 1.38%, reflecting a drop in profitability, which could be a concern if not addressed.

Balance Sheet

The balance sheet is strong with a healthy equity ratio of 45.9% in 2025, suggesting solid financial stability. The debt-to-equity ratio is modest at 0.61, indicating a manageable level of debt. However, the return on equity has decreased to 8.16%, which may suggest efficiency improvements are needed to enhance shareholder returns.

Cash Flow

The company shows a positive trend in free cash flow, with significant growth from a negative position in 2024 to a positive $467 million in 2025. The operating cash flow to net income ratio is strong, reflecting efficient cash generation from operations. However, the free cash flow to net income ratio indicates room for improvement in translating income into cash.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	36.74B	36.48B	35.20B	31.26B	26.85B	24.95B
Gross Profit	12.24B	11.89B	11.46B	10.48B	8.81B	7.57B
EBITDA	1.46B	1.33B	1.71B	1.82B	1.54B	1.10B
Net Income	529.20M	501.58M	568.47M	1.00B	1.50B	703.82M
Balance Sheet
Total Assets	13.88B	13.45B	12.44B	10.96B	9.39B	8.24B
Cash, Cash Equivalents and Short-Term Investments	2.23B	2.90B	2.86B	2.48B	1.76B	2.04B
Total Debt	4.53B	3.73B	3.50B	2.30B	1.87B	1.89B
Total Liabilities	7.88B	7.31B	6.63B	5.36B	4.50B	4.67B
Stockholders Equity	5.99B	6.15B	5.81B	5.60B	4.89B	3.58B
Cash Flow
Free Cash Flow	0.00	467.55M	-234.61M	885.31M	219.94M	1.10B
Operating Cash Flow	0.00	1.46B	210.61M	1.18B	538.07M	1.22B
Investing Cash Flow	0.00	-1.44B	-595.40M	-562.30M	-645.76M	-440.12M
Financing Cash Flow	0.00	15.51M	778.62M	110.78M	-197.38M	-223.84M

Tay Two Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 135.00
• 50DMA: Negative
• 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:7610, the sentiment is Negative. The current price of 135 is below the 20-day moving average (MA) of 146.94, below the 50-day MA of 144.73, and below the 200-day MA of 141.28, indicating a neutral trend. The MACD of 0.04 indicates Positive momentum. The RSI at 46.62 is Neutral, neither overbought nor oversold. The STOCH value of 42.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:7610.

Tay Two Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3560	78 Outperform	¥8.06B	2.45	―	2.66%	15.17%	12.30%
3134	74 Outperform	¥7.71B	-522.29	―	2.05%	13.52%	-42.59%
7610	71 Outperform	¥9.40B	10.41	―	2.70%	7.21%	411.30%
2652	66 Neutral	¥11.81B	7.84	―	0.30%	5.03%	-17.66%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
2769	45 Neutral	¥7.54B	-28.99	―	―	-4.54%	-261.55%
8165	45 Neutral	¥5.77B	33.76	―	―	-4.10%	―