Rhythm Co., Ltd. (7769) AI Stock Analysis

• Market Cap: ¥31.22B
• Dividend Yield: 1.93%
• Average Volume (3M): 21.02K
• Price to Earnings (P/E): 13.8
• Beta (1Y): 0.45
• Revenue Growth: -2.29%
• EPS Growth: 151.87%
• Country: JP
• Employees: 2,486
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Luxury Goods
• EPS (TTM): 39.03
• Shares Outstanding: 8,385,093
• 10 Day Avg. Volume: 28,680
• 30 Day Avg. Volume: 21,023
• PEG Ratio: 0.69
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 0.94
• P/FCF Ratio: 25.58
• 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: 76 Outperform
• Price Target: ¥3,780.00 ▲(0.80% Upside)

Rhythm Co., Ltd. has a strong financial foundation with solid revenue growth and profitability, supported by effective cash flow management. The technical indicators suggest stability, while the valuation is reasonable, making it a moderately attractive investment in the luxury goods sector.

Positive Factors

Cash Flow Management

Effective cash flow management ensures the company can fund operations and investments, supporting long-term growth and stability.

Balance Sheet Health

A strong balance sheet with low leverage enhances financial stability and provides flexibility for strategic initiatives.

Profit Margin Improvement

Improved profit margins indicate better cost management and operational efficiency, enhancing long-term profitability.

Negative Factors

Revenue Growth Decline

Declining revenue growth could indicate challenges in market expansion or product demand, potentially impacting future earnings.

Return on Equity Decline

A declining ROE suggests reduced efficiency in generating profits from equity, which may affect investor confidence and capital allocation.

Free Cash Flow Constraints

Constraints on free cash flow limit discretionary spending, potentially hindering investment in growth opportunities and shareholder returns.

Rhythm Co., Ltd. Business Overview & Revenue Model

Company Description

Rhythm Co., Ltd. (7769) is a leading Japanese company specializing in the design, manufacturing, and distribution of timepieces, including watches and clock mechanisms. The company operates primarily in the consumer electronics sector, focusing on creating innovative and high-quality products that cater to both domestic and international markets. Rhythm Co. is well-known for its precision engineering and commitment to craftsmanship, offering a diverse range of timekeeping products suited for various lifestyles and preferences.

How the Company Makes Money

Rhythm Co., Ltd. generates revenue primarily through the sale of its watches and clock mechanisms. The company's revenue model is multifaceted, with key revenue streams including direct sales to consumers through retail outlets and online platforms, as well as wholesale distribution to third-party retailers. Additionally, Rhythm Co. benefits from partnerships with various brands and manufacturers, allowing them to expand their product offerings and reach new customer segments. The company also invests in research and development to innovate and improve its product lines, ensuring competitiveness in the market, which contributes to sustained earnings growth.

Rhythm Co., Ltd. Financial Statement Overview

Summary

Rhythm Co., Ltd. demonstrates strong financial performance with robust revenue growth, improved profit margins, and a solid balance sheet. The company shows effective cash flow management, although there is room for improvement in maximizing shareholder returns.

Income Statement

Rhythm Co., Ltd. demonstrates strong revenue growth over recent years, with a notable increase from ¥27.3 billion in 2021 to ¥32.7 billion in 2025. The gross profit margin remains healthy at approximately 20%, reflecting efficient cost management. Net profit margin has improved significantly, reaching 2.3% in 2025, signaling enhanced profitability. The EBIT and EBITDA margins have also increased, indicating stronger operational performance.

Balance Sheet

The company maintains a solid balance sheet with a decreasing debt-to-equity ratio, which stood at 0.24 in 2025, showcasing prudent financial leverage. The equity ratio is robust at 69.4%, indicating strong financial stability. However, a slight decrease in ROE from 3.8% in 2024 to 2.4% in 2025 suggests room for improvement in generating returns on equity.

Cash Flow

Rhythm Co., Ltd. enjoys a positive free cash flow trajectory, with a remarkable growth of 68.9% from 2024 to 2025, reflecting effective capital management. The operating cash flow to net income ratio of 3.2 in 2025 indicates strong cash generation relative to income, although the free cash flow to net income ratio is more modest at 1.6, suggesting potential constraints on discretionary cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	32.90B	32.67B	32.60B	31.23B	30.00B	27.30B
Gross Profit	6.98B	6.59B	6.67B	6.78B	6.81B	6.34B
EBITDA	3.51B	2.61B	2.22B	2.46B	2.77B	556.00M
Net Income	2.03B	758.00M	477.00M	794.00M	1.03B	-1.26B
Balance Sheet
Total Assets	45.34B	45.09B	43.57B	39.74B	38.29B	35.70B
Cash, Cash Equivalents and Short-Term Investments	13.51B	13.52B	11.04B	9.90B	9.94B	10.28B
Total Debt	8.75B	7.65B	5.56B	4.66B	4.58B	5.28B
Total Liabilities	14.77B	13.78B	12.43B	10.87B	11.29B	10.66B
Stockholders Equity	30.57B	31.31B	31.14B	28.87B	27.00B	25.02B
Cash Flow
Free Cash Flow	0.00	1.20B	710.00M	94.00M	300.00M	1.15B
Operating Cash Flow	0.00	2.44B	2.46B	1.19B	1.25B	1.85B
Investing Cash Flow	0.00	-1.46B	-2.14B	-1.07B	-876.00M	-585.00M
Financing Cash Flow	0.00	1.32B	150.00M	-467.00M	-1.20B	-686.00M

Rhythm Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3750.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7769, the sentiment is Positive. The current price of 3750 is above the 20-day moving average (MA) of 3636.50, above the 50-day MA of 3477.10, and above the 200-day MA of 3433.24, indicating a bullish trend. The MACD of 83.74 indicates Negative momentum. The RSI at 74.83 is Negative, neither overbought nor oversold. The STOCH value of 95.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7769.

Rhythm Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7769	76 Outperform	¥31.22B	13.83	―	1.93%	-2.29%	151.87%
9904	75 Outperform	¥10.28B	21.74	―	5.21%	6.89%	-1.46%
7638	72 Outperform	¥25.65B	9.98	―	3.03%	34.99%	211.99%
7937	64 Neutral	¥40.18B	23.44	2.46%	3.50%	22.68%	-9.41%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
7872	50 Neutral	¥6.19B	-9.34	―	4.64%	-0.68%	46.43%
8139	48 Neutral	¥33.51B	69.93	―	0.46%	8.02%	2.66%

Rhythm Co., Ltd. Corporate Events

Rhythm Co., Ltd. Reports Strong Financial Growth for First Half of 2025

Rhythm Co., Ltd. reported a significant increase in its financial performance for the six months ended September 30, 2025, with net sales reaching 16,584 million yen, a 3.8% increase from the previous year. The company’s operating profit surged by 193%, and profit attributable to owners of the parent rose by 437.5%, indicating strong operational efficiency and market positioning. Despite the exclusion of Rhythm U.S.A., Inc. from its consolidation scope, the company maintained a robust equity-to-asset ratio of 67.9%, reflecting a stable financial position. The company also announced a forecasted annual dividend per share of 151.75 yen for the fiscal year ending March 31, 2026, highlighting a commitment to returning value to shareholders.