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

Hiday Hidaka Corp.

Watami Co., Ltd.

SFP Holdings Co. Ltd.

CHIKARANOMOTO HOLDINGS Co., Ltd.

Koshidaka Holdings Co., Ltd.

Ringer Hut Co., Ltd.

Matsuya Foods Holdings Co., Ltd.

Fujio Food Group, Inc.

KISOJI CO., LTD.

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)

Negative results in Jun 26

NET PROFIT(HY) At JPY -14,406.8 MM has Grown at -2,405.87%
INTEREST COVERAGE RATIO(Q) Lowest at 661.88
INTEREST(Q) Highest at JPY 160 MM

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 -3.18%, its profits have fallen by -26.9%

Consistent Underperformance against the benchmark over the last 3 years

Along with generating -3.18% returns in the last 1 year, the stock has also underperformed Japan Nikkei 225 in each of the last 3 annual periods

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.

-4.82%

0.41

18.92%

Japan Nikkei 225

56.3%

1.91

29.54%

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

Bullish

Bearish

RSI

No Signal

Bollinger Bands

Mildly Bullish

Mildly Bearish

Moving Averages

Mildly Bearish (Daily)

KST

Mildly Bullish

Bearish

Dow Theory

No Trend

Mildly Bullish

OBV

Mildly Bullish

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

6What is working for the Company

OPERATING CASH FLOW(Y)

Highest at JPY 7,555 MM

NET PROFIT(Q)

At JPY 1,622 MM has Grown at 155.14%

CASH AND EQV(HY)

Highest at JPY 90,692 MM

-21What is not working for the Company

NET PROFIT(HY)

At JPY -14,406.8 MM has Grown at -2,405.87%

INTEREST COVERAGE RATIO(Q)

Lowest at 661.88

INTEREST(Q)

Highest at JPY 160 MM

OPERATING PROFIT(Q)

Lowest at JPY 1,059 MM

OPERATING PROFIT MARGIN(Q)

Lowest at 4.38 %

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

Operating Cash Flow

Highest at JPY 7,555 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)

Net Profit

At JPY 1,622 MM has Grown at 155.14%

over average net sales of the previous four periods of JPY -2,941.53 MM

MOJO Watch

Near term Net Profit trend is very positive

Net Profit (JPY MM)

Cash and Eqv

Highest at JPY 90,692 MM

in the last six Semi-Annual periods

MOJO Watch

Short Term liquidity is improving

Cash and Cash Equivalents

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

Interest

At JPY 160 MM has Grown at 15.11%

period on period (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (JPY MM)

Interest Coverage Ratio

Lowest at 661.88

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 160 MM

in the last five periods and Increased by 15.11% (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (JPY MM)

Operating Profit

Lowest at JPY 1,059 MM

in the last five periods

MOJO Watch

Near term Operating Profit trend is negative

Operating Profit (JPY MM)

Operating Profit Margin

Lowest at 4.38 %

in the last five periods

MOJO Watch

Company's profit margin has deteriorated

Operating Profit to Sales