Riso Kyoiku Group (TSE:4714) has seen its earnings climb by an average of 6% per year over the past five years, with current forecasts calling for an acceleration to 15.9% annual EPS growth. Revenue is set to expand by 5.9% per year, outpacing the Japanese market average of 4.4%. However, net profit margin dipped to 4.2%, down from 5.3% last year, signaling some recent margin pressure for investors to monitor.
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Now let’s see how these figures compare to the prevailing narratives on Simply Wall St. Some will be confirmed, while others could be challenged by the numbers.
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TSE:4714 Earnings & Revenue History as at Oct 2025
Riso Kyoiku Group trades at a price-to-earnings ratio of 25.2x, higher than both its peer group (17.1x) and the wider industry average (17.4x). However, the current share price of ¥208 is below the company’s DCF fair value of ¥254.20.
The prevailing market view highlights the tension between the robust DCF fair value and the apparent premium on earnings multiples.
While the company is priced below its intrinsic estimate, investors are paying a clear premium compared to sector norms. This suggests the market expects outperformance that is not yet fully reflected in reported profit margins.
This mismatch raises questions about whether the growth forecasts can justify the higher P/E, particularly in the context of sector pressures and Riso Kyoiku’s recent margin decline.
Net profit margin has slipped from 5.3% to 4.2% in the past year, even as revenue and earnings growth rates are projected to outpace the market.
The prevailing view highlights concerns about whether Riso Kyoiku can maintain strong profitability as it faces both sector headwinds and rising costs.
Bears are likely to focus on the margin contraction as an early warning sign that top-line growth may not translate efficiently into the bottom line, especially with demographic and digital challenges pressuring the education sector.
Still, guidance for 15.9% annual EPS growth could bolster sentiment if margin pressures prove temporary. Investors will be watching carefully for stabilization in upcoming results.
Riso Kyoiku’s earnings are expected to grow 15.9% per year, nearly double the 8.1% annual pace projected for the broader Japanese market, and revenue is seen expanding at 5.9% per year compared to the 4.4% market average.
This scenario, described in the prevailing market view, reflects optimism about the company’s academic reputation and consistent demand. However, it also carries higher investor expectations in light of premium valuation and margin headwinds.
The strong guidance provides clear support for bullish optimism, but it also means any future stumble in execution or external conditions could quickly shift market sentiment, given the current valuation premium.
In a sector facing demographic decline and digital disruption, Riso Kyoiku must deliver on these forecasts to justify investors’ willingness to pay a premium.
Story Continues
Don’t just look at this quarter; the real story is in the long-term trend. We’ve done an in-depth analysis on Riso Kyoiku Group’s growth and its valuation to see if today’s price is a bargain. Add the company to your watchlist or portfolio now so you don’t miss the next big move.
Despite Riso Kyoiku’s impressive revenue growth outlook, its declining profit margins and valuation premium raise concerns about sustainable profitability in a competitive sector.
If you want surer footing, check out stable growth stocks screener to uncover companies achieving steady growth and resilient margins even as markets shift.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 4714.
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