Watami Co., Ltd. (7522) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

Comparison

Company

Score

Quality

Valuation

Financial

Technical

CHIKARANOMOTO HOLDINGS Co., Ltd.

Hiday Hidaka Corp.

Watami Co., Ltd.

Matsuya Foods Holdings Co., Ltd.

SFP Holdings Co. Ltd.

Koshidaka Holdings Co., Ltd.

Ringer Hut Co., Ltd.

KISOJI CO., LTD.

Fujio Food Group, Inc.

Kappa Create Co., Ltd.

KFC Holdings Japan Ltd.

Why is Watami Co., Ltd. ?

Strong Long Term Fundamental Strength with a 21.67% CAGR growth in Operating Profits

The company is Net-Debt Free
The company has been able to generate a Return on Capital Employed (avg) of 25.26% signifying high profitability per unit of total capital (equity and debt)

With a fall in Net Sales of -2.89%, the company declared Very Negative results in Mar 26

INTEREST COVERAGE RATIO(Q) Lowest at 944.6
DEBT-EQUITY RATIO (HY) Highest at -56.22 %
DEBTORS TURNOVER RATIO(HY) Lowest at 20.22 times

With ROE of 15.12%, it has a attractive valuation with a 1.34 Price to Book Value

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -10.25%, its profits have fallen by -26.9%

Below par performance in long term as well as near term

Along with generating -10.25% returns in the last 1 year, the stock has also underperformed Japan Nikkei 225 in the last 3 years, 1 year and 3 months

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Watami Co., Ltd. should be less than 10%
Overall Portfolio exposure to Leisure Services should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Leisure Services)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Watami Co., Ltd. for you?

Low Risk, Low Return

Absolute

Risk Adjusted

Volatility

Watami Co., Ltd.

-100.0%

0.30

18.66%

Japan Nikkei 225

57.85%

1.98

29.31%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

6.33%

EBIT Growth (5y)

21.67%

EBIT to Interest (avg)

4.98

Debt to EBITDA (avg)

Net Debt to Equity (avg)

-0.66

Sales to Capital Employed (avg)

1.74

Tax Ratio

19.51%

Dividend Payout Ratio

11.05%

Pledged Shares

Institutional Holding

ROCE (avg)

32.87%

ROE (avg)

10.75%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

1.34

EV to EBIT

4.93

EV to EBITDA

3.26

EV to Capital Employed

1.74

EV to Sales

0.26

PEG Ratio

Dividend Yield

ROCE (Latest)

35.29%

ROE (Latest)

15.12%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bullish

Bearish

RSI

No Signal

Bollinger Bands

Bullish

Mildly Bearish

Moving Averages

Mildly Bearish (Daily)

KST

Mildly Bullish

Bearish

Dow Theory

Mildly Bearish

Mildly Bullish

OBV

Mildly Bearish

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

4What is working for the Company

OPERATING CASH FLOW(Y)

Highest at JPY 7,567 MM

RAW MATERIAL COST(Y)

Fallen by 0.37% (YoY

-23What is not working for the Company

INTEREST COVERAGE RATIO(Q)

Lowest at 944.6

DEBT-EQUITY RATIO (HY)

Highest at -56.22 %

DEBTORS TURNOVER RATIO(HY)

Lowest at 20.22 times

INTEREST(Q)

Highest at JPY 139 MM

NET PROFIT(Q)

Lowest at JPY -16,028.8 MM

Here's what is working for Watami Co., Ltd.

Operating Cash Flow

Highest at JPY 7,567 MM and Grown

In each year in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (JPY MM)

Raw Material Cost

Fallen by 0.37% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has improved; this may lead to a rise in profit margin

Raw Material Cost as a percentage of Sales

Here's what is not working for Watami Co., Ltd.

Net Profit

At JPY -16,028.8 MM has Fallen at -1,567.61%

over average net sales of the previous four periods of JPY 1,092.17 MM

MOJO Watch

Near term Net Profit trend is very negative

Net Profit (JPY MM)

Interest Coverage Ratio

Lowest at 944.6

in the last five periods

MOJO Watch

The company's ability to manage interest payments is deteriorating

Operating Profit to Interest

Interest

Highest at JPY 139 MM

in the last five periods and Increased by 6.92% (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (JPY MM)

Net Profit

Lowest at JPY -16,028.8 MM

in the last five periods

MOJO Watch

Near term Net Profit trend is negative

Net Profit (JPY MM)

Debt-Equity Ratio

Highest at -56.22 %

in the last five Semi-Annual periods

MOJO Watch

The company is borrowing more to fund its operations; it's liquidity situation may be stressed

Debt-Equity Ratio

Debtors Turnover Ratio

Lowest at 20.22 times

in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling Debtors has slowed

Debtors Turnover Ratio