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Kumagai Gumi Co Ltd (JP:1861)
:1861

Kumagai Gumi Co (1861) AI Stock Analysis

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JP:1861

Kumagai Gumi Co

(1861)

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Outperform 74 (OpenAI - 5.2)
Rating:74Outperform
Price Target:
¥2,229.00
▲(42.43% Upside)
Action:ReiteratedDate:11/30/25
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
Consistent revenue growth
Kumagai Gumi has delivered mid-teens revenue growth recently (11.5%+), indicating sustained demand for its contracting services. Consistent top-line expansion supports capacity utilization, backlog replenishment and provides a base for margin recovery and long-term cash generation if execution remains steady.
Prudent leverage and equity cushion
The company’s low debt-to-equity (0.23) and nearly 40% equity ratio provide financial flexibility to fund projects, absorb overruns and invest in strategic initiatives. A conservative balance sheet reduces refinancing risk and supports durability through construction cycles.
Contract-based, diversified construction model
As a general contractor across building and civil infrastructure, Kumagai benefits from diversified project streams and long-duration contracts. Progress-based revenue recognition and integrated engineering-to-construction capabilities create recurring contractual cash flows and reduce single-project concentration risk.
Negative Factors
Weak cash conversion
Operational cash generation has fallen versus prior years and free cash flow growth is negative, implying earnings are not converting efficiently to cash. For a project-intensive business, deteriorating cash conversion can strain working capital, limit liquidity for bidding and increase reliance on external funding.
Modest profitability and margin pressure
Return on equity is modest at ~5%, and reported gross margin declined in the latest year, signaling pricing pressure or rising input and subcontract costs. Sustained margin erosion would constrain reinvestment, dividend capacity and the ability to absorb longer project durations or cost overruns.
Project award and execution sensitivity
Revenue and profitability materially depend on winning projects and executing to schedule and budget. This exposes the company to cyclical public/private award patterns, cost inflation, subcontractor risks and change order disputes, making earnings more volatile over medium-term project cycles.

Kumagai Gumi Co (1861) vs. iShares MSCI Japan ETF (EWJ)

Kumagai Gumi Co Business Overview & Revenue Model

Company DescriptionKumagai 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 MoneyKumagai 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
72
Positive
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
78
Positive
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
68
Positive
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.
BreakdownTTMMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue501.27B498.58B443.19B403.50B425.22B450.23B
Gross Profit40.17B38.31B36.08B33.21B43.47B48.09B
EBITDA18.25B16.68B15.04B14.35B25.12B30.13B
Net Income10.40B9.35B8.32B7.97B15.85B17.93B
Balance Sheet
Total Assets443.11B462.53B467.23B376.65B371.10B379.57B
Cash, Cash Equivalents and Short-Term Investments51.05B50.16B70.07B40.98B67.40B71.33B
Total Debt58.74B42.13B52.38B22.20B12.15B11.89B
Total Liabilities266.94B280.70B287.22B206.79B201.79B215.74B
Stockholders Equity176.17B181.83B180.01B169.86B169.30B163.83B
Cash Flow
Free Cash Flow0.004.16B14.73B-23.17B5.10B4.48B
Operating Cash Flow0.008.23B16.97B-18.83B8.26B6.57B
Investing Cash Flow0.00-11.99B-10.78B-8.46B-3.40B-4.31B
Financing Cash Flow0.00-16.47B22.32B456.00M-9.69B-6.11B

Kumagai Gumi Co Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1565.00
Price Trends
50DMA
1771.00
Positive
100DMA
1614.31
Positive
200DMA
1362.92
Positive
Market Momentum
MACD
67.66
Positive
RSI
68.14
Neutral
STOCH
59.83
Neutral
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 1951.75, below the 50-day MA of 1771.00, and above the 200-day MA of 1362.92, indicating a bullish trend. The MACD of 67.66 indicates Positive momentum. The RSI at 68.14 is Neutral, neither overbought nor oversold. The STOCH value of 59.83 is Neutral, 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
¥378.19B13.0216.55%4.26%9.49%64.79%
75
Outperform
¥2.96T17.0014.23%2.47%2.27%70.36%
75
Outperform
¥2.39T22.3611.22%1.48%5.14%773.86%
74
Outperform
¥344.14B16.737.62%3.44%7.54%115.47%
71
Outperform
¥3.41T19.2613.03%1.96%10.52%71.09%
67
Neutral
¥3.32T24.1915.61%1.83%6.60%114.38%
63
Neutral
$10.79B15.437.44%2.01%2.89%-14.66%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:1861
Kumagai Gumi Co
1,990.00
1,038.41
109.12%
JP:1719
Hazama Ando
2,098.50
802.43
61.91%
JP:1812
Kajima
7,014.00
3,904.81
125.59%
JP:1802
Obayashi
4,304.00
2,297.96
114.55%
JP:1803
Shimizu
3,578.00
2,207.47
161.07%
JP:1801
TAISEI
20,390.00
13,795.50
209.20%

Kumagai Gumi Co Corporate Events

Kumagai Gumi Details Progress of Ongoing Share Buyback Program
Mar 2, 2026

Kumagai Gumi Co., Ltd. reported progress on its ongoing share buyback program authorized by its board on January 8, 2026, under the Companies Act and its Articles of Incorporation. The program targets up to 3 million common shares, or about 1.7% of outstanding shares excluding treasury stock, with a maximum budget of 3.5 billion yen, to be executed via market purchases on the Tokyo Stock Exchange between January 30 and March 31, 2026.

During the latest reported period from February 1 to February 28, 2026, the company repurchased 983,400 shares for approximately 1.91 billion yen through market transactions. Cumulatively, by February 28, Kumagai Gumi had acquired 1,044,200 shares at a total cost of about 2.01 billion yen, signaling active capital management that may support shareholder value through reduced share float and potentially improved earnings per share.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen2232.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Posts Higher Sales but Lower Profit, Keeps Full-Year Outlook and Dividend Plan
Feb 18, 2026

Kumagai Gumi reported consolidated net sales of completed construction contracts of ¥351.9 billion for the nine months ended December 31, 2025, up 6.4% year on year, with operating profit of ¥17.45 billion and ordinary profit of ¥11.97 billion. Profit attributable to owners of parent was ¥1.58 billion, reflecting a sharp year-on-year decline, while basic earnings per share rose to ¥69.66 after a 4-for-1 stock split implemented on October 1, 2025.

The company kept its full-year forecast unchanged, projecting ¥493 billion in net sales and ¥22.8 billion in operating profit, and confirmed there is no revision to dividend forecasts, with a year-end dividend of ¥25 per share that reflects the stock split, equivalent to ¥100 without the split. Kumagai Gumi also expanded its consolidation scope by adding Local Energy System Co., Ltd. and KG Dino Resort Co., Ltd., signaling diversification into new business areas while maintaining a solid financial position with total assets of ¥456.4 billion and a capital adequacy ratio of 40.9%.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen2199.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Posts Higher Nine‑Month Sales, Confirms Forecasts After Stock Split
Feb 13, 2026

Kumagai Gumi reported consolidated net sales of completed construction contracts of ¥351.9 billion for the nine months ended December 31, 2025, up 6.4% year on year, with operating profit of ¥17.5 billion and profit attributable to owners of parent of ¥1.58 billion as earnings per share climbed to ¥69.66. The company forecasts full‑year net sales of ¥493 billion and profit of ¥18.5 billion, has kept its earnings and dividend outlook unchanged, implemented a 4‑for‑1 stock split effective October 1, 2025, and expanded its consolidation scope by adding two subsidiaries, moves that collectively signal steady operations and a bid to enhance share liquidity and group growth potential.

Kumagai Gumi’s equity and net assets continued to rise, with a capital adequacy ratio of 40.9% as of December 31, 2025, underscoring a strengthened financial base. The firm plans a year‑end dividend of ¥130 per share for the fiscal year ending March 31, 2026 on a split‑adjusted basis, which corresponds to ¥100 without the split, indicating a commitment to shareholder returns while maintaining financial stability and supporting its medium‑term strategy in the construction sector.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen2189.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Reshapes Top Management With Representative Director Change
Feb 13, 2026

Kumagai Gumi has announced a change in its representative directors as part of a broader effort to strengthen and improve its management system. Executive Vice President Koji Okaichi, currently a Representative Director overseeing technology, safety, quality and environment, new business, international business, and collaboration with Sumitomo Forestry, will step down as director after the June 26, 2026 shareholders’ meeting, with changes to his responsibilities taking effect April 1, 2026.

The reshuffle signals a governance and leadership realignment at the construction group, potentially refining oversight of its technology, new business, and international operations. While limited details were disclosed, the move suggests the company is positioning its leadership structure to better support future strategic initiatives and operational efficiency in a competitive construction market.

The most recent analyst rating on (JP:1861) stock is a Buy with a Yen2189.00 price target. To see the full list of analyst forecasts on Kumagai Gumi Co stock, see the JP:1861 Stock Forecast page.

Kumagai Gumi Begins Execution of ¥3.5 Billion Share Buyback Program
Feb 2, 2026

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
Jan 19, 2026

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
Jan 8, 2026

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
Jan 8, 2026

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
Jan 8, 2026

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
Jan 8, 2026

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
Jan 8, 2026

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Nov 30, 2025