Komatsu (KMTUY) AI Stock Analysis

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Komatsu

(OTC:KMTUY)

77Outperform

Komatsu demonstrates strong financial performance with robust profitability and cash flow generation. Despite some technical weaknesses, the stock's low P/E ratio and high dividend yield suggest attractive valuation. The positive sentiment from the earnings call, with record profits, offsets the challenges in key markets, resulting in a favorable overall stock score.

Komatsu (KMTUY) vs. S&P 500 (SPY)

Market Cap

$23.02B

Dividend Yield3.55%

Average Volume (3M)9.91K

Price to Earnings (P/E)8.7

Beta (1Y)0.96

Revenue Growth-1.87%

EPS Growth-6.15%

CountryUS

Employees65,738

SectorIndustrials

Sector Strength64

IndustryAgricultural - Machinery

Share Statistics

EPS (TTM)2.82

Shares Outstanding950,953,100

10 Day Avg. Volume23,886

30 Day Avg. Volume9,910

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.94

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Komatsu Business Overview & Revenue Model

Company DescriptionKomatsu Ltd. (KMTUY) is a leading global manufacturer of construction, mining, forestry, and military equipment, as well as industrial machinery like press machines, lasers, and thermoelectric generators. Founded in 1921 and headquartered in Tokyo, Japan, the company operates in sectors such as construction, mining, and utilities, with a strong emphasis on innovation and technology to enhance productivity and sustainability.

How the Company Makes MoneyKomatsu generates revenue primarily through the sale and leasing of heavy machinery and equipment across its construction, mining, and utility sectors. Key revenue streams include the manufacturing and distribution of earth-moving equipment like excavators, bulldozers, and dump trucks. The company also earns from providing after-sales services, including maintenance and spare parts, which ensures a consistent revenue flow over the lifespan of its machinery. Additionally, Komatsu's smart construction solutions and IoT-enhanced machinery contribute to its revenue by offering advanced technology and data analytics services. Strategic partnerships and joint ventures, such as those with technology firms to integrate AI and automation into their equipment, further enhance Komatsu's market position and revenue potential.

Komatsu Financial Statement Overview

Summary

Komatsu's financial performance is strong, characterized by healthy profitability, growth, and efficient cash flow management. The company displays a solid balance sheet with manageable leverage and robust equity returns. Continued focus on maintaining profitability margins and managing debt levels will be key to sustaining its financial health in the competitive industrial machinery sector.

Income Statement

Very Positive

Komatsu shows strong profitability with a rising gross profit margin of 31.32% and a net profit margin of 10.18% for the latest period. The revenue growth rate of 9.08% indicates a solid upward trajectory. Both EBIT and EBITDA margins are healthy at 15.71% and 20.37% respectively. While the company demonstrates impressive revenue and profit growth, which are key strengths, maintaining these margins amid industry competition will be crucial.

Balance Sheet

Positive

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.42, indicating moderate leverage. The return on equity is robust at 12.97%, and the equity ratio stands at 53.81%, showcasing strong equity financing. Although the company has a strong equity base, the moderate leverage suggests careful debt management is necessary to maintain financial stability.

Cash Flow

Positive

Komatsu exhibits strong cash flow management with a free cash flow growth rate of 900.44%. The operating cash flow to net income ratio is 1.11, highlighting effective cash generation from operations. The free cash flow to net income ratio of 0.59 suggests a solid capacity to generate free cash flow. Despite the impressive growth in free cash flow, maintaining this trajectory will be important to support future investments and operations.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
3.93T	3.87T	3.54T	2.80T	2.19T	2.44T
	Gross Profit
1.24T	1.21T	1.04T	779.58B	581.05B	695.82B
	EBIT
617.86B	607.19B	490.69B	317.01B	167.33B	250.71B
	EBITDA
777.97B	787.00B	658.49B	473.14B	309.67B	379.30B
	Net Income Common Stockholders
397.74B	393.43B	326.40B	224.93B	106.24B	153.84B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
150.59B	403.18B	289.98B	316.67B	243.13B	249.67B
	Total Assets
3.51T	5.64T	4.88T	4.35T	3.78T	3.65T
	Total Debt
966.25B	1.27T	1.12T	1.01T	965.85B	1.07T
	Net Debt
818.04B	867.24B	826.58B	692.46B	724.04B	818.32B
	Total Liabilities
1.71T	2.44T	2.20T	1.99T	1.77T	1.80T
	Stockholders Equity
1.72T	3.03T	2.54T	2.23T	1.91T	1.77T
Cash Flow		Free Cash Flow
228.31B	231.83B	22.94B	138.01B	172.58B	110.47B
	Operating Cash Flow
433.29B	434.78B	206.47B	300.97B	354.13B	295.18B
	Investing Cash Flow
-206.04B	-204.42B	-169.52B	-143.57B	-163.06B	-190.93B
	Financing Cash Flow
-116.25B	-122.04B	-66.61B	-93.87B	-199.67B	-3.46B

Komatsu Technical Analysis

Technical Analysis Sentiment

Negative

Last Price26.45

Price Trends

50DMA

29.94

Negative

100DMA

28.58

Negative

200DMA

28.20

Negative

Market Momentum

MACD

-0.09

Positive

RSI

40.31

Neutral

STOCH

4.64

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMTUY, the sentiment is Negative. The current price of 26.45 is below the 20-day moving average (MA) of 29.51, below the 50-day MA of 29.94, and below the 200-day MA of 28.20, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 40.31 is Neutral, neither overbought nor oversold. The STOCH value of 4.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KMTUY.

Komatsu Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KMTUY	77 Outperform	$23.02B	8.73	13.15%	3.55%	-1.87%	-6.15%
DE	74 Outperform	$114.90B	18.76	27.91%	1.46%	-20.93%	-34.33%
OSK	68 Neutral	$5.27B	7.88	17.34%	2.31%	11.36%	13.78%
CAT	66 Neutral	$133.85B	12.70	55.36%	1.97%	-3.36%	9.59%
Sector *	62 Neutral	$7.16B	12.21	3.05%	3.43%	3.62%	-14.48%
CNH	60 Neutral	$13.49B	10.93	16.66%	4.35%	-19.64%	-41.23%
AGCO	52 Neutral	$5.84B	46.40	-10.11%	1.48%	-19.08%	-136.41%

* Industrials Sector Average

Performance Comparison

KMTUY

Komatsu

26.45

-3.11

-10.52%

AGCO

Agco

75.77

-45.32

-37.43%

CAT

Caterpillar

301.01

-65.54

-17.88%

CNH

CNH Industrial

11.61

-0.96

-7.64%

Deere

452.59

46.65

11.49%

OSK

Oshkosh

79.17

-42.96

-35.18%

Komatsu Earnings Call Summary

Earnings Call Date: Jan 31, 2025 | % Change Since: -10.64% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance, especially in mining and construction equipment, aided by favorable foreign exchange rates. However, the company faces challenges in demand with significant declines in key markets like China and Europe. Despite these lowlights, the overall sentiment is positive due to record-breaking profits and strategic advancements in electric vehicles.

Highlights

Record-breaking Financial Performance

Net sales increased 5.6% year-on-year to JPY 972 billion, operating income increased 15.9% to JPY 156.4 billion, and net income increased 42.4% to JPY 98.7 billion, marking record highs for the third quarter.

Construction, Mining and Utility Equipment Segment Growth

Segment sales increased by 6.3% to JPY 918.2 billion, and segment profit advanced by 22.2% to JPY 149.1 billion with an improved profit ratio of 16.2%.

Positive Impacts from Foreign Exchange

Foreign exchange rates had a positive impact on both sales and profit, contributing significantly to the record highs achieved.

Mining Equipment Sales Surge

Sales increased by 20% year-on-year to JPY 448 billion in Q3, with expectations to increase by 11% year-on-year to JPY 1,575.9 billion for FY 2023.

Introduction of Electric Excavator

Komatsu introduced a 13-ton class PC138E-11 electric excavator to the domestic market, marking a step towards carbon neutrality by 2050.

Lowlights

Weak Demand in Key Markets

Full year demand is expected to decrease by 10% to 15%, with significant declines in the Chinese market (51% decrease in Q3) and Southeast Asia (11% decrease in Q3).

Industrial Machinery Segment Profit Decline

Segment profit declined 72.8% to JPY 1.3 billion, with a significant drop in high-margin maintenance revenues.

Challenges in the European Market

Demand decreased by 15% in Q3 due to high interest rates and energy prices, with a full-year decline expected between 10% to 15%.

Company Guidance

During Komatsu's third-quarter earnings call for fiscal year 2023, CFO Takeshi Horikoshi presented several metrics highlighting the company's robust financial performance. Net sales increased by 5.6% year-on-year, reaching JPY 972 billion, while operating income saw a significant rise of 15.9% to JPY 156.4 billion, resulting in an operating income to net sales ratio of 16.1%, up 1.4 percentage points. The company's net income surged by 42.4% to JPY 98.7 billion. The construction, mining, and utility equipment segment experienced a 6.3% rise in net sales to JPY 918.2 billion, with segment profit increasing by 22.2% to JPY 149.1 billion. The retail finance segment saw a revenue increase of 23.2% to JPY 27.2 billion, though segment profit decreased by 10.6% to JPY 5.7 billion. Industrial machinery and others reported a 7.7% increase in sales to JPY 46.5 billion, but a 72.8% decline in segment profit to JPY 1.3 billion. The company maintained its annual forecast, projecting a full-year demand decrease in the range of 10% to 15%, excluding China. Despite challenges, Komatsu achieved record highs in net sales and profit, buoyed by improved selling prices and favorable foreign exchange rates.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.