Obayashi (1802) AI Stock Analysis

• Market Cap: $2.64T
• Dividend Yield: 2.47%
• Average Volume (3M): 3.01M
• Price to Earnings (P/E): 10.5
• Beta (1Y): 0.73
• Revenue Growth: 2.27%
• EPS Growth: 70.36%
• Country: JP
• Employees: 16,986
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 77.55
• Shares Outstanding: 691,811,340
• 10 Day Avg. Volume: 2,598,730
• 30 Day Avg. Volume: 3,014,840
• 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: 1.07
• Enterprise Value/Revenue: 1.10
• Enterprise Value/Gross Profit: 9.37
• Enterprise Value/Ebitda: 12.76
• 1Y Price Target: $4,725.68
• Price Target Upside: 23.16% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 235.8
• Revenue Forecast (FY): $2.57T

• Rating: 75 Outperform
• Price Target: ¥4,317.00 ▲(12.51% Upside)
• Action: Reiterated Date: 02/10/26
• Date: Action: Reiterated 02/10/26

The score is driven primarily by strong financial performance (growth, profitability, conservative balance sheet, and improved free cash flow). Technicals remain bullish but are heavily overextended (very high RSI/Stoch), which reduces the score. Valuation is reasonable with a mid-teens P/E and a moderate dividend yield.

Positive Factors

Consistent revenue growth and healthy margins

Sustained revenue growth with stable gross and healthy EBITDA/net margins indicates the company can expand topline while maintaining operational efficiency. This supports durable profit generation across cycles and underpins reinvestment capacity for projects and long-term competitiveness.

Material improvement in free cash flow

A swing from FCF deficit to +35.45B Yen demonstrates improved cash generation and liquidity. Durable positive FCF enhances ability to fund capex, service obligations, and pursue selective development projects without relying heavily on external financing.

Conservative leverage with solid ROE

Low leverage and a double-digit ROE reflect prudent capital structure and efficient use of equity. This conservatism provides financial flexibility to absorb project volatility and supports stable access to credit for large infrastructure or development contracts over the medium term.

Negative Factors

Moderate operating cash conversion

OCF/net income of 0.59 means a sizable portion of reported profits does not convert quickly into cash. Over the medium term this limits internal funding for working capital-intensive construction projects and can increase dependence on payment timing or external liquidity.

Low free cash flow conversion relative to profit

FCF/net income of 0.24 indicates only a quarter of accounting profit becomes discretionary cash. This constrains the company’s capacity to self-fund growth, dividends or unexpected overruns, making long-term investment pacing more sensitive to cash management and receivables.

Project execution and margin pressure risk

As a contract-based constructor, durable profitability hinges on execution, cost control and scheduling. Large projects expose the company to sustained margin volatility from input cost shifts, labor constraints, and subcontractor risk, affecting multi-quarter earnings visibility.

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 primarily makes money by earning revenue from construction and engineering contracts. Its core revenue stream is contract-based construction work, where it is paid for delivering building construction projects (e.g., commercial, public, and other facilities) and civil engineering projects (e.g., infrastructure works). Revenue is generally recognized as work progresses under the terms of customer contracts, with profitability driven by project execution, cost control (materials, labor, subcontracting), and the ability to manage design/engineering complexity and schedule risks. In addition to contracting, Obayashi earns income from related businesses that complement construction, including real estate activities (such as development, leasing, or property-related income) and other ancillary/engineering services tied to construction projects. Factors that contribute to earnings include the volume and mix of public vs. private projects, the competitive environment for large-scale contracts, and collaboration with subcontractors and suppliers; specific significant partnerships are null.

Obayashi Financial Statement Overview

Summary

Strong financial profile supported by robust revenue growth (12.69% from 2024 to 2025), solid profitability (net margin 5.57%; EBITDA margin 9.48%), conservative leverage (debt-to-equity 0.32), and improved free cash flow turning positive in 2025 (35.45B Yen). Cash conversion is moderate (OCF/net income 0.59; FCF/net income 0.24), slightly tempering the score.

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	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
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	373.63B	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	10.78B	-84.47B	-101.61B	-49.83B	-79.08B
Financing Cash Flow	0.00	-51.77B	-51.92B	22.12B	-12.46B	-8.48B

Obayashi Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 3837.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1802, the sentiment is Neutral. The current price of 3837 is below the 20-day moving average (MA) of 4041.40, below the 50-day MA of 3883.56, and above the 200-day MA of 2889.15, indicating a neutral trend. The MACD of -22.48 indicates Positive momentum. The RSI at 44.96 is Neutral, neither overbought nor oversold. The STOCH value of 43.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	¥343.41B	11.11	16.55%	4.26%	9.49%	64.79%
1802	75 Outperform	$2.64T	10.54	14.23%	2.47%	2.27%	70.36%
1803	75 Outperform	¥1.94T	12.97	11.22%	1.48%	5.14%	773.86%
1861	74 Outperform	¥287.07B	9.47	7.62%	3.44%	7.54%	115.47%
1812	71 Outperform	¥2.96T	15.14	13.56%	1.96%	10.52%	71.09%
1801	67 Neutral	¥2.74T	15.64	16.64%	1.83%	6.60%	114.38%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Obayashi Corporate Events

Obayashi to Cancel 2.1% of Outstanding Shares to Tighten Capital Base

Obayashi Corporation’s board has approved the cancellation of 15,139,700 common treasury shares, representing 2.1% of its issued shares, which were previously repurchased under an earlier board resolution. Following the planned cancellation on January 30, 2026, the company’s total number of issued shares will be reduced to 691,811,346, a move that effectively tightens its share supply and may enhance capital efficiency and shareholder value by increasing the relative ownership stake of remaining shareholders.

The most recent analyst rating on (JP:1802) stock is a Buy with a Yen4037.00 price target. To see the full list of analyst forecasts on Obayashi stock, see the JP:1802 Stock Forecast page.

Obayashi Nears ¥40 Billion Ceiling as It Completes Share Buyback Program

Obayashi Corporation has completed a share buyback program authorized by its board on August 8, 2025, acquiring 2,297,000 common shares on the Tokyo Stock Exchange between December 1 and December 23, 2025 at a total cost of approximately ¥7.36 billion. Cumulatively under the August authorization, the company repurchased 15,139,700 shares for about ¥40.0 billion, close to the approved ceiling, and plans to cancel all acquired shares, a move expected to enhance capital efficiency and shareholder value by reducing the total number of shares outstanding.

The most recent analyst rating on (JP:1802) stock is a Buy with a Yen3500.00 price target. To see the full list of analyst forecasts on Obayashi stock, see the JP:1802 Stock Forecast page.