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

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Comparison

Company

Score

Quality

Valuation

Financial

Technical

Hiday Hidaka Corp.

KISOJI CO., LTD.

Watami Co., Ltd.

CHIKARANOMOTO HOLDINGS Co., Ltd.

Kappa Create Co., Ltd.

Matsuya Foods Holdings Co., Ltd.

Ringer Hut Co., Ltd.

SFP Holdings Co. Ltd.

Fujio Food Group, Inc.

Koshidaka Holdings Co., Ltd.

KFC Holdings Japan Ltd.

Why is Watami Co., Ltd. ?

Company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of -3.62

Company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of -3.62
The company has been able to generate a Return on Equity (avg) of 10.75% signifying low profitability per unit of shareholders funds

The company declared very negative results in Mar'25 after positive results in Dec'24

ROCE(HY) Lowest at 9.48%
INVENTORY TURNOVER RATIO(HY) Lowest at 17.97%
PRE-TAX PROFIT(Q) At JPY 673 MM has Fallen at -48.22%

With ROE of 15.93%, it has a expensive valuation with a 1.62 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 5.16%, its profits have fallen by -26.9%

Underperformed the market in the last 1 year

The stock has generated a return of 5.16% in the last 1 year, much lower than market (Japan Nikkei 225) returns of 38.59%

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%

0.24

25.66%

Japan Nikkei 225

38.88%

1.45

26.59%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

-0.49%

EBIT Growth (5y)

118.39%

EBIT to Interest (avg)

-3.62

Debt to EBITDA (avg)

Net Debt to Equity (avg)

-0.66

Sales to Capital Employed (avg)

1.79

Tax Ratio

20.24%

Dividend Payout Ratio

13.18%

Pledged Shares

Institutional Holding

ROCE (avg)

25.26%

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

1.62

EV to EBIT

5.63

EV to EBITDA

3.66

EV to Capital Employed

2.80

EV to Sales

0.29

PEG Ratio

Dividend Yield

ROCE (Latest)

49.72%

ROE (Latest)

15.93%

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

Mildly Bearish

Dow Theory

Mildly Bearish

No Trend

OBV

Mildly Bearish

No Trend

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

5What is working for the Company

OPERATING CASH FLOW(Y)

Highest at JPY 7,057 MM

RAW MATERIAL COST(Y)

Fallen by 1.83% (YoY

CASH AND EQV(HY)

Highest at JPY 88,549 MM

-25What is not working for the Company

ROCE(HY)

Lowest at 9.48%

INVENTORY TURNOVER RATIO(HY)

Lowest at 17.97%

PRE-TAX PROFIT(Q)

At JPY 673 MM has Fallen at -48.22%

NET PROFIT(Q)

At JPY 518.79 MM has Fallen at -50.89%

INTEREST(Q)

Highest at JPY 137 MM

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

Operating Cash Flow

Highest at JPY 7,057 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)

Cash and Eqv

Highest at JPY 88,549 MM

in the last six Semi-Annual periods

MOJO Watch

Short Term liquidity is improving

Cash and Cash Equivalents

Raw Material Cost

Fallen by 1.83% (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.

Interest

At JPY 137 MM has Grown at 12.3%

period on period (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (JPY MM)

Pre-Tax Profit

At JPY 673 MM has Fallen at -48.22%

over average net sales of the previous four periods of JPY 1,299.75 MM

MOJO Watch

Near term Pre-Tax Profit trend is very negative

Pre-Tax Profit (JPY MM)

Net Profit

At JPY 518.79 MM has Fallen at -50.89%

over average net sales of the previous four periods of JPY 1,056.33 MM

MOJO Watch

Near term Net Profit trend is very negative

Net Profit (JPY MM)

Inventory Turnover Ratio

Lowest at 17.97% and Fallen

In each half year in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling inventory has slowed

Inventory Turnover Ratio

Interest

Highest at JPY 137 MM

in the last five periods and Increased by 12.3% (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (JPY MM)