Obayashi (1802) AI Stock Analysis

• Market Cap: ¥2.33T
• Dividend Yield: 2.45%
• Average Volume (3M): 3.03M
• Price to Earnings (P/E): 13.9
• Beta (1Y): 0.54
• Revenue Growth: 2.27%
• EPS Growth: 70.36%
• Country: JP
• Employees: 16,986
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 85.25
• Shares Outstanding: 706,951,050
• 10 Day Avg. Volume: 2,338,110
• 30 Day Avg. Volume: 3,030,723
• PEG Ratio: 0.10
• Price to Book (P/B): 1.23
• Price to Sales (P/S): 0.54
• P/FCF Ratio: 40.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 206.09
• Revenue Forecast (FY): ¥2.57T

• Rating: 73 Outperform
• Price Target: ¥3,484.00 ▲(37.46% Upside)

Obayashi's strong financial performance is the primary driver of its stock score, supported by solid revenue growth, profitability, and financial stability. Technical analysis indicates strong momentum but warns of overbought conditions, which could lead to a short-term pullback. The valuation is fair, offering a balanced view of growth and income potential.

Positive Factors

Revenue Growth

Strong revenue growth indicates expanding operations and market demand, supporting long-term business sustainability and competitive positioning.

Cash Flow Improvement

Improved cash flow enhances liquidity and financial flexibility, enabling the company to invest in growth opportunities and manage economic fluctuations.

Conservative Debt Strategy

A conservative debt strategy reduces financial risk and interest burden, supporting long-term financial stability and operational resilience.

Negative Factors

Cash Flow Conversion

Moderate cash flow conversion indicates potential inefficiencies in turning profits into cash, which could limit reinvestment and growth capabilities.

Profit Margin Stability

Stable profit margins suggest limited improvement in cost management or pricing power, potentially impacting future profitability enhancements.

Cash Flow to Net Income Ratio

While adequate, the cash flow to net income ratio suggests room for improvement in cash generation efficiency, which is crucial for sustaining operations and growth.

Obayashi Business Overview & Revenue Model

Company Description

Obayashi Corporation engages in the construction business in Japan, North America, Asia, the Middle East, Europe, and Oceania. The company constructs buildings, including offices, condominiums, commercial facilities, factories, hospitals, and schools; and civil engineering projects, such as tunnels, bridges, dams, riverbanks, railroads, and expressways. It is also involved in the development and leasing of real estate properties in various locations, primarily in metropolitan areas, as well as property management activities; solar, biomass, hydropower, geothermal, and wind power generation business; and PPP and agriculture business. In addition, the company sells materials and equipment for construction; develops and sells computer software; sells and leases electronic equipment; offers finance-related services; and operates golf clubs. Further, it engages in the provision of urban development, contracted engineering, management, consultancy services, etc.; and is involved in the M&E design and construction activities. The company was founded in 1892 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Obayashi generates revenue primarily through its construction and engineering services, which include the design and execution of infrastructure projects such as roads, bridges, tunnels, and buildings. The company's revenue model is based on winning contracts from both public and private sector clients, which often involves competitive bidding processes. Key revenue streams include project management fees, construction contracts, and maintenance services. Additionally, Obayashi benefits from strategic partnerships with government agencies and private developers, enabling it to secure significant projects. Factors contributing to its earnings include the company's strong reputation for quality and reliability, its ability to innovate in construction technology, and an increasing demand for infrastructure development in urban areas.

Obayashi Financial Statement Overview

Summary

Obayashi's financial statements reveal a strong financial position with consistent revenue growth, solid profitability, and improved cash flow generation. The conservative use of debt enhances financial stability, while robust equity returns highlight efficient management. Although there are areas for improvement in cash flow conversion, the overall financial health of the company is commendable, positioning it well for future growth opportunities.

Income Statement

The company has shown robust revenue growth of 12.69% from 2024 to 2025. Gross profit margin remains stable at 11.36% for 2025, with a net profit margin of 5.57%. EBIT and EBITDA margins are healthy at 5.47% and 9.48% respectively, indicating strong operational efficiency and profitability. The consistent upward trend in revenue and profitability metrics suggests solid performance in the income statement.

Balance Sheet

The debt-to-equity ratio is 0.32, indicating a conservative leverage strategy. The return on equity (ROE) stands at 12.61%, reflecting good profitability relative to equity. The equity ratio is 38.05%, suggesting a balanced capital structure. Overall, the balance sheet portrays financial stability with efficient leverage usage and solid equity returns.

Cash Flow

The company achieved significant improvement in free cash flow from a deficit in 2024 to a positive 35.45 billion Yen in 2025. The operating cash flow to net income ratio is 0.59, indicating adequate cash generation relative to net income. The free cash flow to net income ratio is 0.24, reflecting moderate conversion of profits to free cash flow. This positive trend in cash flow metrics shows improved liquidity and cash management.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.57T	2.62T	2.33T	1.98T	1.92T	1.77T
Gross Profit	300.37B	297.83B	219.60B	216.57B	154.34B	225.78B
EBITDA	220.73B	248.22B	138.49B	140.30B	78.61B	156.60B
Net Income	138.28B	146.05B	75.06B	77.67B	39.13B	98.78B
Balance Sheet
Total Assets	2.88T	3.04T	3.02T	2.61T	2.42T	2.27T
Cash, Cash Equivalents and Short-Term Investments	468.11B	406.14B	347.62B	426.69B	271.03B	262.95B
Total Debt	367.47B	376.34B	332.90B	344.36B	280.87B	266.99B
Total Liabilities	1.71T	1.83T	1.82T	1.57T	1.43T	1.31T
Stockholders Equity	1.12T	1.16T	1.15T	997.11B	955.69B	931.01B
Cash Flow
Free Cash Flow	0.00	35.45B	-27.99B	131.87B	11.67B	-32.63B
Operating Cash Flow	0.00	85.63B	50.40B	228.46B	69.70B	24.80B
Investing Cash Flow	0.00	9.60B	-84.47B	-101.61B	-49.83B	-79.08B
Financing Cash Flow	0.00	-50.59B	-51.92B	22.12B	-12.46B	-8.48B

Obayashi Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2534.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1802, the sentiment is Positive. The current price of 2534.5 is below the 20-day moving average (MA) of 3185.05, below the 50-day MA of 2869.91, and above the 200-day MA of 2347.88, indicating a bullish trend. The MACD of 112.56 indicates Positive momentum. The RSI at 73.70 is Negative, neither overbought nor oversold. The STOCH value of 82.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1802.

Obayashi Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1719	79 Outperform	¥338.45B	10.65	16.55%	4.26%	9.49%	64.79%
1860	76 Outperform	¥387.36B	12.31	―	2.73%	18.92%	73.08%
1801	74 Outperform	¥2.42T	18.17	15.61%	1.82%	6.60%	114.38%
1802	73 Outperform	¥2.33T	13.87	14.23%	2.45%	2.27%	70.36%
1812	71 Outperform	¥2.91T	16.73	13.03%	1.92%	10.52%	71.09%
1803	69 Neutral	¥1.80T	18.24	11.22%	1.46%	5.14%	773.86%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Obayashi Corporate Events

Obayashi Corporation Advances Share Buyback Strategy

Obayashi Corporation has announced the acquisition of 2,668,600 of its own shares, amounting to ¥7.78 billion, as part of a broader strategy to repurchase up to 25 million shares by the end of December 2025. This move is part of a strategic initiative to enhance shareholder value and optimize capital structure, reflecting the company’s commitment to maintaining a robust financial position.

Obayashi Corporation Updates on Share Acquisition Progress

Obayashi Corporation announced the status of its share acquisition program, which was resolved by the Board of Directors in August 2025. The company acquired 4,223,900 common shares at a cost of approximately ¥10.45 billion between October 1 and October 31, 2025, as part of a larger plan to acquire up to 25 million shares. This move is part of Obayashi’s strategic efforts to enhance shareholder value and optimize capital structure.

Obayashi Corporation Revises Financial Forecasts Upward for Fiscal Year 2026

Obayashi Corporation has revised its financial forecasts for the fiscal year ending March 31, 2026, showing an increase in expected net sales, operating income, and profit attributable to owners of the parent. The revisions are attributed to favorable progress in construction projects and improved profitability in overseas subsidiaries, which enhance the company’s operational performance and market positioning.

Obayashi Corporation Reports Mixed Financial Results with Profit Growth

Obayashi Corporation reported a decrease in net sales by 5% for the six months ending September 30, 2025, compared to the previous year. However, the company saw a significant increase in operating income by 78% and ordinary income by 72.2%, indicating improved profitability. The profit attributable to owners of the parent also rose by 42.9%. The company has revised its full-year financial forecast, expecting a slight decline in net sales but an increase in operating and ordinary income, reflecting strategic adjustments and potential growth in profitability.

Obayashi Corporation Announces Share Buyback Progress

Obayashi Corporation announced the acquisition of 2,815,100 of its own shares, amounting to approximately ¥6.94 billion, as part of a broader share buyback initiative authorized by its Board of Directors. This move is part of a strategic effort to enhance shareholder value and optimize capital structure, with potential implications for the company’s market positioning and investor relations.