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Komatsu Ltd 6301

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Stock XTKS Rating as of
JPY 4,577.00 −61.00 (1.32%)
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Company Report

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Komatsu Earnings: Record Share Buyback Signals Free Cash Flow Expansion for 2024

Jason Kondo

The market reaction to Komatsu’s fiscal 2023 results, ending March 2024, was strong partly due to the announcement of a record JPY 100 billion (or 3.5% of outstanding shares) share buyback, which was surprising given that the previous major one of about JPY 30 billion was in fiscal 2014. Moreover, considering the massive amount to be repurchased despite the operating income guidance of an 8% decline and a record capital expenditure plan of JPY 205 billion for fiscal 2024, we expect the company to improve free cash flow generation by managing its working capital. As a result of the market reaction, Komatsu’s shares are now trading near our fair value estimate of JPY 5,000, which is unchanged as we maintain our operating income estimate for fiscal 2024 at similar levels to guidance.

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Price vs Fair Value

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6301 is trading at a 8% discount.
Price
JPY 4,577.00
Fair Value
JPY 2,444.00
Uncertainty
High
1-Star Price
JPY 5,778.00
5-Star Price
JPY 4,579.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Macroeconomic headwinds have little impact on mining equipment demand, as commodities are needed for electric vehicle battery and renewable energy investments.

Bears

A secular decline in coal usage will lead to weaker underground mining equipment demand.

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Trading Information

Previous Close Price
JPY 4,638.00
Day Range
JPY 4,562.00–4,622.00
52-Week Range
JPY 3,251.00–4,775.00
Bid/Ask
JPY 4,561.00 / JPY 4,578.00
Market Cap
JPY 4.33 Tril
Volume/Avg
3.8 Mil / 3.9 Mil

Key Statistics

Price/Earnings (Normalized)
10.86
Price/Sales
1.14
Dividend Yield (Trailing)
3.65%
Dividend Yield (Forward)
3.67%
Total Yield
3.60%

Company Profile

Komatsu manufactures and sells construction, mining, utility, forestry, and industrial machinery. It also provides related services such as supplying parts, financing, and maintenance. Its major products are hydraulic excavators, bulldozers, wheel loaders, dump trucks, and motor graders, which focus on surface mining and construction. Through its subsidiary, Komatsu Mining (previously Joy Global before being acquired), the company manufactures and sells surface mining equipment like draglines as well as underground mining machinery such as continuous miners and blasthole drills. The company is headquartered in Tokyo.
Sector
Industrials
Industry
Farm & Heavy Construction Machinery
Stock Style Box
Large Value
Total Number of Employees
70,608
Website
https://www.komatsu.jp

Competitors

Valuation

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Metric
6301
CAT
SAND
Price/Earnings (Normalized)
 10.8615.3821.59
Price/Book Value
 1.459.342.95
Price/Sales
 1.142.552.22
Price/Cash Flow
 6.7413.1411.91
Price/Earnings
6301
CAT
SAND

Financial Strength

Metric
6301
CAT
SAND
Quick Ratio
 0.970.730.82
Current Ratio
 2.071.351.62
Interest Coverage
 11.9226.545.56
Quick Ratio
6301
CAT
SAND

Profitability

Metric
6301
CAT
SAND
Return on Assets (Normalized)
 8.30%13.02%8.51%
Return on Equity (Normalized)
 15.97%59.16%17.33%
Return on Invested Capital (Normalized)
 11.13%19.73%12.40%
Return on Assets
6301
CAT
SAND
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