Sata Construction Co., Ltd. (1826) AI Stock Analysis

• Market Cap: ¥14.30B
• Dividend Yield: 5.36%
• Average Volume (3M): 21.42K
• Price to Earnings (P/E): 11.1
• Beta (1Y): 0.25
• Revenue Growth: -3.19%
• EPS Growth: 109.84%
• Country: JP
• Employees: 460
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 24.15
• Shares Outstanding: 13,386,233
• 10 Day Avg. Volume: 11,400
• 30 Day Avg. Volume: 21,423
• PEG Ratio: 0.04
• Price to Book (P/B): 1.08
• Price to Sales (P/S): 0.52
• P/FCF Ratio: 29.06
• 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): N/A
• Revenue Forecast (FY): N/A

• Rating: 59 Neutral
• Price Target: ¥1,319.00 ▲(12.54% Upside)
• Action: Reiterated Date: 10/01/25
• Date: Action: Reiterated 10/01/25

Sata Construction Co., Ltd. has a robust financial foundation with strong revenue growth and a stable balance sheet. However, the stock faces bearish technical indicators and a high P/E ratio, suggesting potential overvaluation. The attractive dividend yield partially offsets these concerns, providing a stable income stream for investors.

Positive Factors

Strong balance sheet and low leverage

A high equity ratio (56.5%) and very low debt-to-equity (0.09) provide durable financial resilience for a contractor. This capital structure supports bid capacity, absorbs project timing volatility, and reduces refinancing risk, enabling stable operations and strategic investments over months.

Robust revenue growth and improving gross margin

Sustained ~23.7% revenue growth alongside a rising gross margin (9.24%) indicates stronger project intake and better cost management or pricing. This combination builds a more durable earnings base, supports reinvestment into backlog and capabilities, and improves medium-term cash generation potential.

Positive free cash flow despite OCF pressure

Even with a material drop in operating cash flow, management maintained positive free cash flow and a healthy FCF-to-net-income ratio. Persistent FCF provides flexibility for capex, dividends or working capital needs and cushions the business while operational cash conversion issues are addressed.

Negative Factors

Sharp decline in operating cash flow

A 55.2% fall in operating cash flow is a structural concern for a construction firm where receivables and progress payments drive liquidity. Prolonged weakness can constrain project execution, increase reliance on external financing, and limit flexibility to fund growth or sustain payouts without corrective measures.

Modest return on equity

An ROE of ~3.9% signals limited efficiency turning shareholder capital into profits. Over a multimonth horizon, persistently low ROE may hamper the company’s ability to justify capital allocation, attract investment, or rapidly expand without improving project selection or margin capture.

Erosion in operating margins and need for efficiencies

Declining EBIT and EBITDA margins point to rising costs or execution inefficiencies. For a contractor, margin erosion reduces resilience to input-cost inflation and competitive bidding pressures; absent operational improvements, profitability and cash conversion could remain constrained over the medium term.

Sata Construction Co., Ltd. Business Overview & Revenue Model

Company Description

Sata Construction Co., Ltd. engages in the contracting and investigation, planning and designing, and supervision of civil engineering and other construction works in Japan. It also offers civil engineering services for highways, bridges, tunnels, dams, residential land development projects, and disaster recovery works; and extension, renovation, and remodeling of buildings and condominiums. In addition, the company manufactures, sells, and rents construction materials, equipment, and machineries; owns and leases vehicles, ships, aircrafts, and other machineries; and produces and sells gravels and wood products. Further, it engages in the industrial waste recycling and treatment; building rental and tourism; insurance agency and recruitment of life insurance; and land house selling, mediation, and lending businesses, as well as regional development, urban development, and other projects. Additionally, the company generates, supplies, and sells electricity. Sata Construction Co., Ltd. was founded in 1918 and is headquartered in Maebashi, Japan.

How the Company Makes Money

Sata Construction Co., Ltd. generates revenue primarily through its construction and engineering services. The company secures contracts from both public and private sector clients for large-scale infrastructure and building projects. Revenue streams include income from project management, construction services, and maintenance contracts. Sata Construction Co., Ltd. may also engage in partnerships and joint ventures to expand its project portfolio and enhance its market presence. Additionally, the company could derive income from consultancy services and technical support provided to clients. Factors such as government infrastructure spending, urban development initiatives, and demand for commercial and residential spaces significantly contribute to the company's earnings.

Sata Construction Co., Ltd. Financial Statement Overview

Summary

Sata Construction Co., Ltd. demonstrates strong revenue growth and a stable balance sheet with a solid equity base. However, the company faces challenges with declining operating cash flow and modest profitability metrics, indicating a need for improved operational efficiencies.

Income Statement

Sata Construction Co., Ltd. shows a solid revenue growth of 23.7% from the previous year, with a steady increase in gross and net profit margins. Gross profit margin improved to 9.24%, indicating efficient cost management. However, the company's EBIT and EBITDA margins have slightly decreased, showcasing a need for operational efficiency improvements.

Balance Sheet

The company maintains a strong equity base with an equity ratio of 56.5%, reflecting financial stability. The debt-to-equity ratio is low at 0.09, indicating conservative leverage. Return on equity is modest at 3.9%, suggesting room for profitability enhancement.

Cash Flow

Although operating cash flow decreased by 55.2% from the previous year, the company managed to maintain a positive free cash flow. The free cash flow to net income ratio is healthy, but the declining operating cash flow poses a risk if not addressed.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	31.42B	32.26B	26.08B	30.12B	26.66B	31.69B
Gross Profit	3.02B	2.98B	1.72B	3.47B	2.22B	2.39B
EBITDA	1.08B	1.13B	357.00M	2.01B	864.00M	1.12B
Net Income	555.00M	611.00M	75.00M	1.32B	355.00M	651.00M
Balance Sheet
Total Assets	25.76B	27.49B	26.33B	26.82B	25.88B	25.23B
Cash, Cash Equivalents and Short-Term Investments	14.78B	14.10B	13.94B	12.39B	10.11B	9.60B
Total Debt	1.30B	1.33B	1.35B	1.30B	1.59B	1.60B
Total Liabilities	11.38B	11.96B	11.08B	11.24B	11.31B	10.84B
Stockholders Equity	14.38B	15.52B	15.24B	15.57B	14.55B	14.40B
Cash Flow
Free Cash Flow	0.00	579.00M	1.97B	2.72B	754.00M	185.00M
Operating Cash Flow	0.00	900.00M	2.01B	2.91B	1.32B	194.00M
Investing Cash Flow	0.00	-362.00M	-97.00M	-21.00M	-584.00M	-109.00M
Financing Cash Flow	0.00	-371.00M	-367.00M	-601.00M	-230.00M	-357.00M

Sata Construction Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1172.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1826, the sentiment is Negative. The current price of 1172 is below the 20-day moving average (MA) of 1238.40, below the 50-day MA of 1230.30, and below the 200-day MA of 1173.45, indicating a neutral trend. The MACD of -7.38 indicates Positive momentum. The RSI at 38.54 is Neutral, neither overbought nor oversold. The STOCH value of 16.06 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:1826.

Sata Construction Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1716	71 Outperform	¥16.73B	8.08	―	2.87%	-1.39%	-4.43%
1798	69 Neutral	¥13.13B	6.02	―	1.60%	22.31%	101.45%
1914	67 Neutral	¥14.76B	4.49	―	3.68%	5.82%	-22.14%
1850	66 Neutral	¥13.98B	9.58	―	1.01%	17.09%	43.01%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
1776	60 Neutral	¥18.21B	14.29	―	2.54%	5.89%	-30.27%
1826	59 Neutral	¥14.30B	11.13	―	5.36%	-3.19%	109.84%