Kumagai Gumi Co (1861) AI Stock Analysis

• Market Cap: ¥315.78B
• Dividend Yield: 3.44%
• Average Volume (3M): 778.45K
• Price to Earnings (P/E): 22.8
• Beta (1Y): 0.65
• Revenue Growth: 7.54%
• EPS Growth: 115.47%
• Country: JP
• Employees: 4,432
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 22.08
• Shares Outstanding: 173,142,240
• 10 Day Avg. Volume: 901,790
• 30 Day Avg. Volume: 778,446
• PEG Ratio: 1.40
• Price to Book (P/B): 0.95
• Price to Sales (P/S): 0.35
• P/FCF Ratio: 41.63
• 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: ¥2,036.67
• Price Target Upside: 30.14% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: ¥2,001.00 ▲(27.86% Upside)

Kumagai Gumi Co's stock is supported by strong technical momentum and a stable financial position, though profitability and cash flow efficiency challenges need attention. The valuation is moderate, with a decent dividend yield, but growth acceleration is necessary to justify higher valuations.

Positive Factors

Revenue Growth

A 12.5% year-over-year revenue increase signals durable demand for Kumagai Gumi’s contracting services and supports a larger project backlog. Sustained top-line growth improves bargaining power with subcontractors and suppliers, enabling reinvestment in capacity and long-term contract competitiveness.

Prudent Balance Sheet

Low leverage and a nearly 40% equity ratio provide financial flexibility to bid on large infrastructure projects and absorb construction cycle volatility. Prudent capital structure reduces refinancing risk, supports capital spending and limits stress during project delays, strengthening long-term resilience.

Established Contracting Business Model

A diversified general-contractor model across building and civil engineering yields recurring, contract-based revenue flows and progress-billing cash predictability. This structural mix reduces single-market dependence, leverages engineering and project execution capabilities, and sustains revenue visibility over multi-year projects.

Negative Factors

Declining Cash Position

A falling cash balance weakens liquidity buffers critical for funding working capital and mobilizing project starts in construction. Persistent cash drains can force reliance on external financing, increase borrowing costs, and limit the company's ability to absorb delays or scale bidding in capital-intensive infrastructure work.

Margin Pressure

A year-over-year decline in gross margin suggests rising input costs or pricing pressure on contracts. For a contractor, compressing gross margins erodes project profitability, reduces room for overhead absorption, and can permanently lower returns unless cost controls or pricing power improve across future bids.

Cash Conversion Efficiency

Worsening conversion of reported earnings into operating cash points to working-capital strain or slower collections on contract receivables. Over time this reduces free cash for capex or debt reduction, forces short-term financing for project cycles, and increases execution risk on multi-period construction contracts.

Kumagai Gumi Co Business Overview & Revenue Model

Company Description

Kumagai Gumi Co.,Ltd. operates as a construction company in Japan and internationally. The company constructs tunnels, roads and bridges, railways, dams, and airports/marine ports, as well as water and sewerage, environmental, energy, renewal, ICT civil engineering, housing/mansion, office/government, hotel, commercial, culture, education/research, sports/entertainment, medical/social welfare, plant, distribution, and other projects. It also engages in the production of asphalt mixture and the paving of roads, airports, ports, bridges, etc.; building renovation business, including building deterioration surveys and seismic diagnosis to the planning, design, and construction of comfortable spaces, as well as after-sales services; and manufacture of steel products for shield tunnels and construction machinery, as well as civil engineering and renovation, environmental-related projects, and basic construction; and operates a leasing business for a steel construction. In addition, the company provides construction and building plans, and applications for projects; construction education to universities and construction companies; and insurance agency services, as well as operates as a technology trading company for construction industry. Kumagai Gumi Co.,Ltd. was founded in 1898 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Kumagai Gumi generates revenue primarily through its construction contracts, which include both public and private sector projects. The company bids on and secures contracts for infrastructure developments, earning revenue from the execution of these projects. Key revenue streams include construction services, engineering consulting, and project management fees. Additionally, Kumagai Gumi may engage in joint ventures and partnerships with local and international firms to expand its project portfolio and capabilities, further enhancing its earnings potential. Factors contributing to its financial success include a strong reputation for quality and reliability, a diversified project pipeline, and strategic alliances in the construction industry.

Kumagai Gumi Co Financial Statement Overview

Summary

Kumagai Gumi Co shows strong revenue growth and a solid balance sheet with manageable debt levels. However, challenges in profitability and cash flow efficiency could impact operational flexibility. The company's financial health is stable but requires monitoring to address cash flow concerns.

Income Statement

Kumagai Gumi Co has shown positive revenue growth with a 12.51% increase in the latest year, accompanied by improving gross and net profit margins. The EBIT and EBITDA margins indicate stable operational efficiency. However, the company experienced a decline in gross profit margin over the past year, which may suggest rising costs or pricing pressures.

Balance Sheet

The company maintains a strong equity position with an equity ratio of 39.3%, reflecting stability. The debt-to-equity ratio is moderate at 0.23, indicating prudent leverage levels. The return on equity stands at 5.14%, suggesting modest profitability. The decreasing cash position over the years is a concern that could impact future liquidity.

Cash Flow

Kumagai Gumi Co's cash flow from operations is positive, but there's a significant decline compared to previous years, pointing to potential operational challenges. The free cash flow growth is negative, and the ratio of operating cash flow to net income shows a decline, suggesting efficiency issues in translating income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	501.27B	498.58B	443.19B	403.50B	425.22B	450.23B
Gross Profit	40.17B	38.31B	36.08B	33.21B	43.47B	48.09B
EBITDA	18.25B	16.68B	15.04B	14.35B	25.12B	30.13B
Net Income	10.40B	9.35B	8.32B	7.97B	15.85B	17.93B
Balance Sheet
Total Assets	443.11B	462.53B	467.23B	376.65B	371.10B	379.57B
Cash, Cash Equivalents and Short-Term Investments	51.05B	50.16B	70.07B	40.98B	67.40B	71.33B
Total Debt	58.74B	42.13B	52.38B	22.20B	12.15B	11.89B
Total Liabilities	266.94B	280.70B	287.22B	206.79B	201.79B	215.74B
Stockholders Equity	176.17B	181.83B	180.01B	169.86B	169.30B	163.83B
Cash Flow
Free Cash Flow	0.00	4.16B	14.73B	-23.17B	5.10B	4.48B
Operating Cash Flow	0.00	8.23B	16.97B	-18.83B	8.26B	6.57B
Investing Cash Flow	0.00	-11.99B	-10.78B	-8.46B	-3.40B	-4.31B
Financing Cash Flow	0.00	-16.47B	22.32B	456.00M	-9.69B	-6.11B

Kumagai Gumi Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1565.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1861, the sentiment is Positive. The current price of 1565 is below the 20-day moving average (MA) of 1743.05, below the 50-day MA of 1627.34, and above the 200-day MA of 1287.32, indicating a bullish trend. The MACD of 56.70 indicates Negative momentum. The RSI at 75.45 is Negative, neither overbought nor oversold. The STOCH value of 87.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1861.

Kumagai Gumi Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1719	79 Outperform	¥372.70B	11.73	16.55%	4.26%	9.49%	64.79%
1861	74 Outperform	¥315.78B	22.75	7.62%	3.44%	7.54%	115.47%
1803	74 Outperform	¥1.96T	18.81	11.22%	1.48%	5.14%	773.86%
1802	73 Outperform	$2.61T	15.92	14.23%	2.47%	2.27%	70.36%
1812	71 Outperform	¥3.22T	18.49	13.03%	1.96%	10.52%	71.09%
1801	67 Neutral	$2.75T	20.66	15.61%	1.83%	6.60%	114.38%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Kumagai Gumi Co Corporate Events

Kumagai Gumi Begins Execution of ¥3.5 Billion Share Buyback Program

Kumagai Gumi Co., Ltd., a Japanese construction firm listed on the Tokyo Stock Exchange Prime Market, focuses on civil engineering and building construction projects. The company has disclosed the initial status of a board-approved share repurchase program, acquiring 60,800 shares of its common stock on the Tokyo Stock Exchange between January 30 and 31, 2026, for a total of ¥105.9 million. This buyback is part of a larger authorization granted on January 8, 2026, allowing repurchases of up to 3 million shares, or about 1.7% of outstanding shares (excluding treasury shares), for a maximum of ¥3.5 billion through March 31, 2026. The move underscores management’s capital allocation strategy and may support shareholder value by consolidating equity and signaling confidence in the company’s financial position.

The most recent analyst rating on (JP:1861) stock is a Hold with a Yen1899.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Sets Offer Price for Secondary Share Offering and Over-Allotment

Kumagai Gumi Co., Ltd. has set the offer price for a secondary offering of its common shares at 1,673 yen per share, with the total amount of the offering through purchase and underwriting by the underwriter reaching approximately 16.69 billion yen, and delivery scheduled for January 26, 2026. In addition, the company will conduct a secondary offering via over-allotment of 1,496,500 shares at the same offer price, totaling about 2.50 billion yen, a move that is expected to support liquidity in its shares and facilitate orderly distribution to the market as part of its broader capital markets strategy.

The most recent analyst rating on (JP:1861) stock is a Hold with a Yen1869.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Books ¥3.8 Billion Extraordinary Gain From Partial Sale of Sumitomo Forestry Stake

Kumagai Gumi has completed the partial sale of its shareholding in Sumitomo Forestry Co., Ltd., disposing of 4,777,600 shares via a block trade through a securities firm. As a result, its stake in Sumitomo Forestry has been reduced from 2.5% to 1.7% of the outstanding shares, and the company will record an extraordinary gain of 3,763 million yen as gain on sale of investment securities in its consolidated and non-consolidated results for the fourth quarter of the fiscal year ending March 31, 2026. The company stated that this finalized amount does not change the full-year earnings and dividend forecasts it announced earlier the same day, signaling that the impact of the transaction has already been incorporated into its guidance and should not alter expectations for shareholders or other stakeholders.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1752.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Books ¥4 Billion Share-Sale Gain, Lifts Profit and Dividend Forecasts

Kumagai Gumi has decided to sell 4,777,600 shares of Sumitomo Forestry, booking an expected ¥4.0 billion gain on sale of investment securities as extraordinary income to improve asset efficiency and reinforce its financial position. The sale prompts an upward revision of the full-year profit forecast for the fiscal year ending March 31, 2026, with profit attributable to owners of the parent now expected to reach ¥18.5 billion on a consolidated basis and ¥17.2 billion on a non-consolidated basis, significantly lifting projected earnings per share after a recent stock split. In line with its policy of targeting a roughly 40% payout ratio under its mid-term plan, the company has also raised its year-end dividend forecast from ¥20 to ¥25 per share, signaling stronger shareholder returns on the back of the improved earnings outlook driven mainly by the extraordinary gain.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1752.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi and Sumitomo Forestry Cut Cross-Shareholdings While Deepening Alliance

Kumagai Gumi Co., Ltd. and Sumitomo Forestry Co., Ltd. announced coordinated reductions in their cross-shareholdings as part of efforts to improve capital efficiency while maintaining and deepening their capital and business alliance. Sumitomo Forestry plans to sell up to 11,473,400 shares of Kumagai Gumi through a secondary offering, while Kumagai Gumi will sell 4,777,600 shares of Sumitomo Forestry via a block trade, with both disposals conducted on an equal, proportional basis and no further share sales planned. The companies said the alliance—centered on combining Sumitomo Forestry’s expertise in wood-based construction and environmental greening with Kumagai Gumi’s advanced civil engineering and construction technologies—will continue unchanged, and Kumagai Gumi will remain an equity-method affiliate of Sumitomo Forestry. The impact on Sumitomo Forestry’s earnings is expected to be minor, whereas Kumagai Gumi will book an extraordinary gain on the sale of investment securities in the fourth quarter of the fiscal year ending March 31, 2026, providing a one-off boost to its results while signaling a more disciplined approach to capital structure and shareholder value.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1752.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Launches Share Buyback to Boost Shareholder Returns and Capital Efficiency

Kumagai Gumi has resolved to acquire up to 3 million of its own common shares, representing about 1.7% of its outstanding stock (excluding treasury shares), with a maximum outlay of 3.5 billion yen. The buyback, to be executed via market purchases on the Tokyo Stock Exchange between January 30 and March 31, 2026, is aimed at enhancing shareholder returns and improving capital efficiency, signaling management’s focus on capital discipline and potentially supporting the company’s share price and return metrics for investors.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1752.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi to Adjust Alliance Structure with Sumitomo Forestry via Large Secondary Share Offering

Kumagai Gumi has resolved to conduct a secondary offering of its common shares as part of an adjustment to its long-standing capital and business alliance with Sumitomo Forestry. Sumitomo Forestry will sell 9,976,900 Kumagai Gumi shares through an underwritten secondary offering, with pricing to be set at 90–100% of the market closing price on a specified date in January, and an additional over-allotment option of up to 1,496,500 shares may be executed depending on investor demand. The move is aimed at improving capital efficiency and enhancing shareholder value by partially unwinding cross-shareholdings while maintaining the alliance, as Sumitomo Forestry is expected to remain classified as an “other associate,” signaling continuity in their strategic relationship despite a reduction in mutual shareholdings.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1752.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Co. Reports Financial Results and Announces Share Split

Kumagai Gumi Co., Ltd. reported its consolidated financial results for the six months ended September 30, 2025, showing a modest increase in net sales of completed construction contracts. The company also conducted a 4-for-1 share split of its common stock as of October 1, 2025, which impacts the calculation of basic earnings per share and net assets per share. This strategic move could potentially enhance market liquidity and shareholder value.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1494.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Co. Reports Financial Results and Announces Share Split

Kumagai Gumi Co., Ltd. reported its consolidated financial results for the six months ended September 30, 2025, showing a modest increase in net sales and operating profit compared to the previous year. The company also announced a 4-for-1 share split effective October 1, 2025, which impacts the calculation of earnings per share and dividend forecasts, reflecting a strategic move to enhance stock liquidity and shareholder value.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen1494.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.