Stream Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥24.02B
• Operating Income: ¥92M
• Net Income: ¥39M
• EPS: ¥0.26

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Stream Co., Ltd. (30710) delivered top-line growth in FY2026 Q3, with revenue up 9.8% YoY to ¥24.0bn, but profitability remains thin and volatile. Gross profit reached ¥3,562m, implying a gross margin of 14.8%, while SG&A of ¥3,485m consumed nearly all gross profit, resulting in an operating income of ¥92m and an operating margin of only 0.38%. Despite the slender margin profile, operating income grew 19.2% YoY, reflecting some operating leverage as revenue scales faster than expenses. Ordinary income of ¥91m rose 50.5% YoY, aided by contained non-operating items, though net non-operating expenses still slightly detracted. Net income, however, fell sharply by 81.0% YoY to ¥7m, indicating pressure below the operating line and/or taxes or special items; several items are not disclosed in the dataset, limiting full reconciliation. DuPont shows ROE at 0.25% (net margin 0.03%, asset turnover 3.48x, financial leverage 2.43x), with the extremely low net margin the primary drag. Asset turnover is robust for a commerce-oriented business, but it cannot offset the meager margin. Liquidity metrics are solid, with a current ratio of 1.65x and quick ratio of 1.65x, supported by ¥895m in cash and ¥1,700m in receivables versus ¥3,246m in current liabilities. The balance sheet shows total assets of ¥6.90bn and equity of ¥2.84bn (equity ratio computable at roughly 41%, though the reported equity ratio field is unreported). Borrowings appear present via ¥733m short-term loans and ¥73m long-term loans, and interest coverage is adequate at 11.8x given modest interest expense. Operating cash flow was strong at ¥788m, substantially exceeding net income, likely driven by favorable working capital movements; investing cash flow was undisclosed while capex was modest at ¥11m. Financing cash flow was a net outflow of ¥393m, implying deleveraging or other repayments, with no dividends or buybacks disclosed for the period. Dividend policy remains conservative with DPS at zero and payout metrics not meaningful given data fields. Overall, the quarter shows improving operating leverage on growing sales but continued sensitivity to cost structure and below-the-line items, yielding very low ROE. Key watchpoints are sustainability of gross margin, SG&A discipline, and working capital management that has been a key driver of cash generation. Data limitations (e.g., unreported inventories, investing cash flows, and some ratio fields) restrict precise attribution of the profit-to-cash conversion and tax effects.

Profitability Analysis

ROE_decomposition: ROE 0.25% = Net margin 0.03% × Asset turnover 3.48x × Financial leverage 2.43x. The primary constraint is the extremely thin net margin; asset efficiency is high and leverage moderate. margin_quality: Gross margin 14.8% (¥3,562m/¥24,021m) is stable for a value-driven retail/commerce model but offers limited buffer. SG&A ratio is high at 14.5% (¥3,485m/¥24,021m), leaving an operating margin of 0.38% (¥92m/¥24,021m). Ordinary margin is ~0.38% and net margin collapses to 0.03% due to below-the-line items and/or tax effects not fully disclosed. operating_leverage: Revenue +9.8% YoY vs operating income +19.2% YoY indicates incremental operating leverage, but absolute margins remain razor-thin. Further leverage requires SG&A containment and/or gross margin improvement; current structure leaves profits highly sensitive to small changes in pricing or fulfillment costs.

Growth Assessment

revenue_sustainability: Top-line growth of 9.8% YoY suggests healthy demand momentum. With asset turnover at 3.48x, the model emphasizes volume over margin, consistent with a transactional e-commerce/retail profile. profit_quality: Operating income growth outpaced revenue growth, implying better cost absorption; however, net income fell 81% YoY to ¥7m, indicating poor transmission of operating gains to bottom line due to non-operating/tax or special items. EBITDA margin is only 1.0%, underscoring limited earnings cushion. outlook: If revenue growth persists and SG&A discipline is maintained, incremental margin improvements are plausible, but the low base and high sensitivity to costs/non-operating items cap near-term earnings trajectory. Sustained growth requires stabilizing gross margin and reducing dependence on below-the-line volatility.

Financial Health

liquidity: Current ratio 1.65x and quick ratio 1.65x (inventories unreported). Cash ¥895m and receivables ¥1,700m versus current liabilities ¥3,246m provide adequate short-term coverage. Working capital of ¥2,106m supports operations. solvency: Computed equity ratio ≈ 41% (¥2,835m/¥6,895m); reported equity ratio field is unreported. Liabilities-to-equity of ~1.20x (using totals). Interest coverage 11.8x indicates manageable debt service. capital_structure: Loans disclosed: short-term ¥733m, long-term ¥73m; cash on hand exceeds these borrowings, suggesting a near-net-cash posture on disclosed items. Financing CF outflow of ¥393m implies deleveraging or lease/interest/service outflows during the period.

Cash Flow Quality

earnings_quality: OCF of ¥788m vastly exceeds net income of ¥7m (OCF/NI ≈ 113x), implying significant working capital inflows and/or timing effects. Given thin accrual profits, cash conversion is driven more by balance sheet movements than recurring margins. FCF_analysis: Capex is modest at ¥11m. On disclosed figures, an adjusted FCF proxy (OCF − Capex) would be ~¥777m. The Investing CF line is unreported, so full FCF cannot be confirmed from the cash flow statement alone. working_capital: Receivables ¥1,700m and payables ¥1,653m are large relative to equity, consistent with a high-turn model. Inventories are unreported. The strong OCF likely reflects favorable changes in receivables/payables; sustainability is uncertain without detailed turnover data.

Dividend Sustainability

payout_ratio_assessment: DPS is zero and total dividends paid are undisclosed as non-zero; the reported payout ratio fields are not reliable for assessment. On a practical basis, no cash distributions are indicated. FCF_coverage: With no dividends disclosed and positive adjusted FCF proxy, coverage would be ample if a small dividend were initiated; however, given very low net income and volatile below-the-line items, management appears to prioritize balance sheet strength. policy_outlook: Given thin profitability and focus on cash preservation/deleveraging (negative financing CF), a conservative stance on dividends likely persists until profits stabilize. DOE reported as 0.00% reflects unreported data rather than a formal policy metric.

Risk Assessment

Business Risks:

• Structural low-margin model susceptible to price competition and promotional intensity
• High reliance on volume/turnover; small gross margin shocks can erase operating profit
• Dependence on working capital cycling for cash generation
• Potential exposure to consumer demand swings and seasonality
• Execution risk in SG&A discipline and logistics/fulfillment costs

Financial Risks:

• Short-term funding reliance (¥733m short-term loans) and refinancing risk
• Tax and below-the-line volatility impacting net income
• Limited EBITDA margin (1.0%) reducing buffer against cost inflation
• Data gaps (e.g., inventories, investing CF) obscure complete cash and leverage picture

Key Concerns:

• Net margin at 0.03% and ROE at 0.25% remain sub-scale
• Sustainability of strong OCF given likely working capital tailwind
• Visibility on capital allocation and potential need for ongoing deleveraging

Investment Implications

Key Takeaways:

• Revenue growth is healthy at +9.8% YoY, with some operating leverage (OI +19.2% YoY)
• Profitability is extremely thin (operating margin 0.38%, EBITDA margin 1.0%)
• Net income down 81% YoY highlights below-the-line sensitivity
• Liquidity is adequate (current ratio 1.65x) and interest coverage is comfortable (11.8x)
• Strong OCF (¥788m) likely driven by working capital; durability uncertain
• Balance sheet appears moderately leveraged on totals but near-net-cash versus disclosed loans
• Dividend stance remains conservative with DPS at zero

Metrics to Watch:

• Gross margin and SG&A ratio trajectory
• Operating margin and ordinary margin progression
• Working capital days (AR/AP/inventory) and OCF sustainability
• Short-term versus long-term debt mix and refinancing schedule
• Effective tax and special items impacting net income
• Capex discipline and clarity on investing cash flows

Relative Positioning: Positioned as a high-turn, low-margin operator; efficiency (asset turnover) is competitive, but profitability and ROE lag peers that command higher gross margins or stronger operating leverage.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
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