Sundrug Co (9989) AI Stock Analysis

• Market Cap: ¥453.66B
• Dividend Yield: 3.04%
• Average Volume (3M): 271.71K
• Price to Earnings (P/E): 14.1
• Beta (1Y): 0.33
• Revenue Growth: 6.32%
• EPS Growth: 8.19%
• Country: JP
• Employees: 6,662
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Pharmaceuticals
• EPS (TTM): 76.61
• Shares Outstanding: 119,331,184
• 10 Day Avg. Volume: 294,250
• 30 Day Avg. Volume: 271,706
• PEG Ratio: 2.88
• Price to Book (P/B): 1.83
• Price to Sales (P/S): 0.61
• P/FCF Ratio: 63.83
• 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: ¥4,830.00
• Price Target Upside: 16.75% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 271.05
• Revenue Forecast (FY): ¥847.80B

• Rating: 69 Neutral
• Price Target: ¥4,249.00 ▲(2.71% Upside)
• Action: Downgraded Date: 09/13/25
• Date: Action: Downgraded 09/13/25

Sundrug Co's strong financial performance is the primary driver of its stock score, supported by consistent revenue growth and solid balance sheet metrics. However, technical indicators suggest bearish momentum, which weighs down the overall score. The valuation is reasonable, providing some support to the stock's attractiveness.

Positive Factors

Strong balance sheet

Minimal leverage and a high equity ratio provide durable financial flexibility. With debt-to-equity at 0.14 and ROE of 11.4%, the company can fund store expansion, endure demand shocks, and pursue opportunistic investments without stressing solvency over the next several quarters.

Consistent revenue growth

Sustained mid-single-digit top-line growth reflects steady demand for pharmacy and drugstore products. For a consumer staples/health retailer, persistent revenue growth indicates resilient market position and recurring customer traffic that supports stable earnings over the medium term.

Solid cash generation

Strong operating cash generation (OCF/net income >1) and recent large free cash flow growth enhance funding for dividends, reinvestment, and deleveraging. Reliable cash conversion supports long-term capital allocation and reduces reliance on external financing.

Negative Factors

Thin net margins

A net margin under 4% leaves limited buffer against cost inflation, wage increases, or price competition. For a retail pharmacy operator, small margin headroom can compress free cash flow and constrain strategic investments if input or operating costs rise persistently.

Low FCF conversion

Only a quarter of reported net income converts to free cash flow, indicating capex or working capital needs absorb earnings. This reduces durable flexibility for acquisitions, store rollouts, or increasing shareholder returns without improving conversion dynamics.

Reimbursement/regulatory exposure

A meaningful portion of revenue depends on Japan's dispensing fees and reimbursement rules. Structural policy changes or fee reductions can materially affect pharmacy margins and revenue trajectory, creating persistent regulatory risk for earnings durability.

Sundrug Co Business Overview & Revenue Model

Company Description

Sundrug Co.,Ltd. operates and manages drug stores and dispensing pharmacies in Japan. It also operates discount stores that offers food, cosmetics, home appliances, clothing, car supplies, sports and goods, alcoholic beverages, and pharmaceutical products, as well as fresh food, kerosene, etc. The company was founded in 1957 and is headquartered in Fuchu, Japan.

How the Company Makes Money

Sundrug makes money primarily through retail sales and pharmacy-related services. (1) Drugstore retail sales: The company generates revenue from selling a broad mix of products in its stores, typically including OTC medicines, cosmetics and personal care, health foods/supplements, household goods, and other everyday consumer items. Revenue is recorded at the point of sale, and profitability is influenced by product mix, pricing, private-label/owned-brand penetration (if applicable), inventory turnover, and store traffic. (2) Prescription dispensing and pharmacy services: Sundrug earns revenue by dispensing prescription medications and providing related pharmacy services; in Japan this commonly involves reimbursement mechanisms tied to dispensing fees and medication costs. This stream is driven by prescription volume, pharmacy footprint (including in-store pharmacies), and regulatory pricing/reimbursement frameworks. (3) Other/ancillary income: If disclosed in company reporting, additional earnings can come from supplier-related income (e.g., rebates or promotional allowances), tenant/space-related income, or other retail services; if such items are not specifically disclosed, details are null. Significant partnerships or specific counterparties contributing materially to earnings: null.

Sundrug Co Financial Statement Overview

Summary

Sundrug Co presents a robust financial profile with consistent revenue and profit growth, strong margins, and a solid balance sheet characterized by low leverage and high equity. The company efficiently generates cash, though further improvement in free cash flow conversion would enhance financial flexibility.

Income Statement

Sundrug Co has demonstrated consistent revenue growth, with a 6.66% increase in the most recent year. The company maintains healthy profit margins with a gross profit margin of 25.45% and a net profit margin of 3.84% for the latest period. EBIT and EBITDA margins are strong at 5.55% and 7.61% respectively, indicating efficient operational performance. Overall, the income statement reflects a robust financial health with a positive growth trajectory.

Balance Sheet

The balance sheet of Sundrug Co is solid, characterized by a low debt-to-equity ratio of 0.14, suggesting minimal leverage risk. The company has a strong equity ratio of 60.73%, indicating a healthy reliance on equity financing. Return on equity stands at 11.40%, highlighting efficient use of equity to generate profits. The company exhibits financial stability with a strong equity base and manageable debt levels.

Cash Flow

Sundrug Co's cash flow statement shows a positive free cash flow growth rate of 160.31% recently, demonstrating effective cash generation capabilities. The operating cash flow to net income ratio stands at 1.34, indicating strong cash generation relative to reported profits. The free cash flow to net income ratio of 0.25 suggests room for improvement in converting profits into free cash flow. Overall, the cash flow position is strong, with excellent cash generation and growth.

Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	814.94B	801.81B	751.78B	690.46B	648.73B	634.31B
Gross Profit	203.56B	186.81B	189.32B	171.95B	156.51B	158.55B
EBITDA	63.58B	61.89B	56.24B	49.52B	44.26B	46.01B
Net Income	31.40B	30.75B	29.13B	25.70B	23.85B	25.33B
Balance Sheet
Total Assets	442.27B	445.08B	421.31B	361.72B	325.77B	308.53B
Cash, Cash Equivalents and Short-Term Investments	62.98B	64.96B	69.70B	80.87B	89.33B	86.50B
Total Debt	44.22B	39.48B	35.85B	939.00M	529.00M	114.00M
Total Liabilities	172.20B	175.37B	168.21B	125.39B	105.17B	103.37B
Stockholders Equity	270.06B	269.71B	253.09B	236.33B	220.59B	205.16B
Cash Flow
Free Cash Flow	0.00	7.71B	4.76B	12.59B	12.86B	15.94B
Operating Cash Flow	0.00	41.16B	41.19B	37.38B	31.68B	31.76B
Investing Cash Flow	0.00	-35.37B	-74.85B	-28.51B	-20.66B	-17.90B
Financing Cash Flow	0.00	-10.60B	22.49B	-17.33B	-8.19B	-8.06B

Sundrug Co Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4137.00
• 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:9989, the sentiment is Negative. The current price of 4137 is above the 20-day moving average (MA) of 4072.45, below the 50-day MA of 4144.04, and below the 200-day MA of 4322.09, indicating a bearish trend. The MACD of -62.03 indicates Positive momentum. The RSI at 35.88 is Neutral, neither overbought nor oversold. The STOCH value of 42.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:9989.

Sundrug Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7649	75 Outperform	¥642.13B	23.29	15.71%	0.96%	21.81%	67.76%
3148	75 Outperform	¥201.67B	13.66	―	2.35%	7.55%	16.01%
9989	69 Neutral	¥453.66B	14.05	11.37%	3.04%	6.32%	8.19%
3391	67 Neutral	¥1.06T	25.31	―	1.72%	―	―
3549	67 Neutral	¥347.18B	20.79	―	0.41%	15.81%	27.05%
3349	60 Neutral	¥520.03B	22.79	―	0.93%	3.73%	18.84%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Sundrug Co Corporate Events

Sundrug Posts Steady Nine-Month Profit Growth, Keeps Full-Year Outlook Intact

Sundrug reported consolidated net sales of ¥635.7 billion for the nine months to Dec. 31, 2025, up 5.3% year on year, with operating profit rising 4.9% to ¥36.5 billion and profit attributable to owners of parent edging 1.7% higher to ¥24.2 billion. The company’s financial position remained solid, with total assets increasing to ¥470.2 billion and an equity ratio of 59.3%, while management kept its full-year forecast unchanged, targeting ¥850 billion in net sales, modest profit growth and a slight increase in the annual dividend to ¥131 per share, underscoring steady but slowing earnings momentum for shareholders.

The most recent analyst rating on (JP:9989) stock is a Hold with a Yen4500.00 price target. To see the full list of analyst forecasts on Sundrug Co stock, see the JP:9989 Stock Forecast page.