Kobe Steel (5406) AI Stock Analysis

• Market Cap: ¥889.62B
• Dividend Yield: 4.68%
• Average Volume (3M): 1.84M
• Price to Earnings (P/E): 8.8
• Beta (1Y): 0.95
• Revenue Growth: -1.97%
• EPS Growth: 47.63%
• Country: JP
• Employees: 38,050
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Steel
• EPS (TTM): 54.62
• Shares Outstanding: 396,345,980
• 10 Day Avg. Volume: 1,901,770
• 30 Day Avg. Volume: 1,835,069
• PEG Ratio: 0.58
• Price to Book (P/B): 0.59
• Price to Sales (P/S): 0.27
• P/FCF Ratio: 19.50
• 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: ¥2,100.00
• Price Target Upside: -5.38% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): 256.88
• Revenue Forecast (FY): ¥2.49T

• Rating: 80 Outperform
• Price Target: ¥2,602.00 ▲(17.23% Upside)
• Action: Reiterated Date: 11/28/25
• Date: Action: Reiterated 11/28/25

Kobe Steel's strong financial performance and attractive valuation are the primary drivers of its high score. While technical indicators suggest bullish momentum, caution is advised due to potential overbought conditions. The absence of earnings call data and corporate events does not detract from the overall positive outlook.

Positive Factors

Profitability & margins

Kobe Steel's income-statement trends show robust gross margins and a consistent increase in net income, reflecting durable operational efficiency across cycles. Healthy EBIT/EBITDA margins support reinvestment, dividend capacity and resilience to commodity swings over months.

Cash generation ability

The company converts earnings into operating cash effectively, with free cash flow conversion supporting capex, maintenance and shareholder returns. Solid cash generation underpins financial flexibility for projects and cyclical downturns over the medium term.

Balance sheet stability

A solid equity base and a moderate debt-to-equity profile indicate a stable capital structure that can fund investment and absorb cyclical shocks. This balance sheet footing supports credit access and strategic spending over the next several quarters.

Negative Factors

Recent revenue weakness

A negative recent revenue growth rate signals demand headwinds or mix shifts that can erode operating leverage. If the decline persists, it will pressure margins, limit internal funding for growth and make it harder to sustain profit trajectory over coming quarters.

Free cash flow variability

Variability in free cash flow growth implies uneven cash availability from period to period, complicating budgeting for capex, dividends and debt reduction. Persistent swings can force external financing or delay strategic projects, reducing long-term predictability.

Material total debt level

Although leverage metrics look moderate, the company notes significant total debt which raises fixed-cost obligations and refinancing risk. High nominal debt can limit strategic flexibility and raise vulnerability to rate or demand shocks over the medium term.

Kobe Steel Business Overview & Revenue Model

Company Description

Kobe Steel, Ltd. engages in the materials, machinery, and electric power businesses in Japan, North and South Americas, Europe, the Middle East, rest of Asia, and Oceania. The company offers steel sheet products, including high-tensile strength, hot rolled, cold rolled, electro-galvanized, and hot-dipped galvanized steel sheets; steel wire rods and bars; and aluminum and steel plates. It also provides steel casting and forging products, such as crankshafts, marine parts, chemical processing equipment, and rolls, as well as materials for plastic molding; and titanium products, copper sheets and strips, and steel powders. In addition, the company offers robots and electric power sources, and welding materials; and machinery products, such as standard compressors, tire and rubber machinery products, rotating machinery products, plastic processing machinery products, advanced technology equipment, rolling mill products, and ultra high pressure equipment, as well as LNG vaporizers, pressure vessels, brazed aluminum heat exchangers, and micro channel heat exchanger and reactors. Further, it provides signaling, communication, power supply, automatic fare collection, and platform screen door systems; hydraulic and mini hydraulic excavators, mini wheel loaders, and road machinery; construction, metal, forestry, and industrial waste recycling machinery; and crawler and wheel cranes. Additionally, the company generates and supplies electric power; offers material and structural analysis, testing, physical analysis, and other services; manufactures and sells target materials and test equipment; sells and rents detached homes; and provides brokerage, renovation, insurance, and other services, as well as operational management services of public facilities. It also offers services in the field of iron units; and water treatment, waste incineration, PCB detoxification, and soil remediation services. The company was founded in 1905 and is headquartered in Kobe, Japan.

How the Company Makes Money

Kobe Steel generates revenue through multiple key streams, primarily from the sale of steel products, which are essential for construction, automotive, and infrastructure projects. Their aluminum and copper segments also contribute significantly to revenue, catering to industries such as aerospace, electronics, and packaging. Additionally, Kobe Steel earns income from its machinery and engineering services, which include the design and manufacturing of industrial equipment and systems. The company benefits from strategic partnerships and collaborations with other firms in various sectors, enhancing its market reach and technological capabilities. Moreover, factors such as global demand for steel and metals, fluctuations in commodity prices, and advancements in manufacturing processes play a crucial role in shaping its earnings.

Kobe Steel Financial Statement Overview

Summary

Kobe Steel demonstrates strong profitability and operational efficiency with robust revenue growth and stable leverage. However, recent revenue growth slowdown and free cash flow variability suggest areas for improvement.

Income Statement

Kobe Steel has demonstrated strong revenue growth over the years, particularly from 2021 to 2025. The company's gross profit margin has remained robust, and there's a consistent increase in net income, highlighting improved profitability. The EBIT and EBITDA margins also show a healthy operational performance. However, the revenue growth rate has slowed recently, indicating potential challenges in market expansion.

Balance Sheet

The company maintains a solid equity base, with a return on equity that reflects efficient utilization of shareholder funds. The debt-to-equity ratio is moderate, suggesting a balanced approach to leverage, though total debt remains significant. The equity ratio indicates a stable financial structure with a good proportion of assets funded by equity.

Cash Flow

Kobe Steel shows a strong operating cash flow to net income ratio, indicating effective cash generation from its operations. The free cash flow to net income ratio also underscores good cash conversion. However, fluctuations in free cash flow growth rate suggest variability in capital expenditure and investment activities over the period.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	2.53T	2.56T	2.54T	2.47T	2.08T	1.71T
Gross Profit	424.80B	423.22B	435.99B	321.29B	307.80B	223.19B
EBITDA	217.71B	277.44B	296.00B	223.91B	202.40B	131.25B
Net Income	134.77B	120.18B	109.55B	72.57B	60.08B	23.23B
Balance Sheet
Total Assets	2.82T	2.89T	2.92T	2.87T	2.73T	2.58T
Cash, Cash Equivalents and Short-Term Investments	175.61B	220.12B	278.84B	203.52B	260.70B	317.54B
Total Debt	867.52B	886.33B	863.47B	907.05B	959.87B	1.05T
Total Liabilities	1.60T	1.65T	1.79T	1.90T	1.86T	1.81T
Stockholders Equity	1.15T	1.16T	1.06T	913.96B	815.33B	710.36B
Cash Flow
Free Cash Flow	0.00	34.99B	110.42B	20.73B	12.36B	21.58B
Operating Cash Flow	0.00	148.26B	205.28B	119.69B	168.81B	194.80B
Investing Cash Flow	0.00	-113.87B	-53.72B	-97.27B	-161.51B	-141.85B
Financing Cash Flow	0.00	-96.23B	-81.21B	-85.56B	-69.14B	118.44B

Kobe Steel Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2219.50
• 50DMA: Positive
• 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:5406, the sentiment is Positive. The current price of 2219.5 is below the 20-day moving average (MA) of 2267.98, above the 50-day MA of 2207.68, and above the 200-day MA of 1847.49, indicating a bullish trend. The MACD of 6.71 indicates Positive momentum. The RSI at 53.99 is Neutral, neither overbought nor oversold. The STOCH value of 40.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5406.

Kobe Steel Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5406	80 Outperform	¥889.62B	8.81	10.78%	4.68%	-1.97%	47.63%
5471	74 Outperform	¥482.46B	17.95	6.84%	2.99%	-0.02%	-40.45%
5423	73 Outperform	¥176.48B	12.17	7.36%	3.42%	-18.72%	-25.26%
5482	71 Outperform	¥221.19B	20.19	5.06%	1.80%	4.10%	152.90%
5401	67 Neutral	¥3.36T	-57.86	-0.26%	4.53%	1.31%	-101.19%
5411	64 Neutral	¥1.28T	26.58	2.92%	4.59%	-8.07%	-41.42%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%

Kobe Steel Corporate Events

Kobe Steel Slashes Fiscal 2025 Non‑Consolidated Earnings Forecast on Weak Demand and Steel Margin Pressure

Kobe Steel has cut its non-consolidated earnings forecast for fiscal 2025, lowering projected net sales from 1.39 trillion yen to 1.33 trillion yen and halving expected ordinary profit to 40 billion yen, with profit now seen at 75 billion yen. The downgrade reflects anticipated lower dividends from group companies, weaker materials sales amid sluggish automotive and construction demand, a slower-than-expected recovery in the semiconductor market, a deterioration in steel metal spreads due to softer steel market conditions, and additional negative inventory valuation impacts from falling primary steel raw material prices, underscoring mounting margin pressure and demand headwinds across its core businesses.

The most recent analyst rating on (JP:5406) stock is a Buy with a Yen2542.00 price target. To see the full list of analyst forecasts on Kobe Steel stock, see the JP:5406 Stock Forecast page.

Kobe Steel Profit Falls on Lower Sales; Cuts Annual Dividend Payout

Kobe Steel reported consolidated net sales of ¥1,778.1 billion for the nine months ended December 31, 2025, down 5.6% year-on-year, with operating profit falling 24.2% to ¥94.4 billion and profit attributable to owners of parent declining 27.8% to ¥84.3 billion, reflecting weaker earnings despite an improvement in the equity-to-asset ratio to 41.9%. The company maintained its dividend forecast for the fiscal year ending March 31, 2026 at a reduced total of ¥80 per share versus ¥100 in the prior year and revised its full-year earnings outlook to anticipate further year-on-year declines in sales and profits, signaling a more challenging operating environment and a cautious stance on shareholder returns.

The most recent analyst rating on (JP:5406) stock is a Buy with a Yen2542.00 price target. To see the full list of analyst forecasts on Kobe Steel stock, see the JP:5406 Stock Forecast page.