KATO WORKS CO., LTD. (6390) AI Stock Analysis

• Market Cap: ¥19.57B
• Dividend Yield: 5.4%
• Average Volume (3M): 62.47K
• Price to Earnings (P/E): 4.1
• Beta (1Y): 1.22
• Revenue Growth: -2.22%
• EPS Growth: 18.80%
• Country: JP
• Employees: 990
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): 630.92
• Shares Outstanding: 11,743,587
• 10 Day Avg. Volume: 66,630
• 30 Day Avg. Volume: 62,470
• PEG Ratio: <0.01
• Price to Book (P/B): 0.33
• Price to Sales (P/S): 0.27
• P/FCF Ratio: -1.03
• 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: 51 Neutral
• Price Target: ¥1,704.00 ▲(29.38% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is held back primarily by poor financial performance (net losses and negative operating/free cash flow). Technicals are supportive with strong momentum but are tempered by overbought signals. Valuation helps meaningfully due to the very low P/E and solid dividend yield.

Positive Factors

Equity ratio / capital base

A stable equity ratio near 43% indicates the company retains a meaningful equity buffer versus assets, which supports credit access and resilience through cyclical downturns. Over months this structural capital mix helps fund operations and limits immediate solvency pressure versus peers.

Operational scale (workforce)

A workforce of roughly 1,000 employees implies substantive manufacturing and service capacity in agricultural machinery. That scale supports consistent production, product servicing and incremental innovation, providing durable operational capability and a platform to regain revenue momentum.

Stable gross margin base

A steady gross margin around 16% signals persistent production economics and some pricing or cost control ability. While modest, this stability provides a structural foundation for margin recovery if revenues stabilize, and it highlights existing gross-profit generation before SG&A and financing.

Negative Factors

Declining revenue trend

An ongoing revenue decline (TTM -8%) erodes scale economics, reduces fixed-cost absorption, and undermines market position. If sustained across several quarters, shrinking top-line makes margin recovery harder, compresses cash conversion, and raises the bar for strategic turnaround initiatives.

Negative operating and free cash flow

Persistent negative operating and free cash flow indicates the business is not generating internal funds to sustain operations or invest. This structural cash shortfall forces reliance on external financing, limits capex/R&D, and raises liquidity risk that can impair long-term competitiveness.

High leverage

A near-1.0 debt-to-equity ratio magnifies financial risk, increasing interest burden and reducing flexibility to fund recovery initiatives. Combined with net losses and weak cash flow, elevated leverage raises refinancing risk and could constrain strategic options over the coming months.

KATO WORKS CO., LTD. Business Overview & Revenue Model

Company Description

Kato Works Co.,Ltd. engages in the manufacture and sale of various machines for lifting and construction industries worldwide. It offers mobile cranes, such as rough terrain, all terrain, city range, truck, and crawler cranes; excavators; crawler carriers; earth boring rigs; vacuum suction cleaners; and street and snow sweepers, as well as spare parts. The company sells its products under the KATO brand. Kato Works Co.,Ltd. was founded in 1895 and is headquartered in Tokyo, Japan.

How the Company Makes Money

KATO WORKS generates revenue through the sale of its machinery and equipment, which are utilized in various sectors including construction, transportation, and infrastructure development. Key revenue streams include direct sales of new equipment, aftermarket services such as parts and maintenance, and long-term rental agreements. The company also benefits from strategic partnerships with construction firms and government agencies, enabling it to secure large contracts for infrastructural projects. Additionally, KATO WORKS invests in research and development to innovate its product offerings, thus maintaining a competitive edge and attracting new clientele.

KATO WORKS CO., LTD. Financial Statement Overview

Summary

Financials are weak: revenues are declining (TTM down ~8% YoY), profitability has deteriorated to a TTM net loss with negative EBIT/EBITDA margins, and cash flow is stressed with negative operating and free cash flow. Balance sheet leverage is relatively high (debt-to-equity ~0.98) despite a stable equity ratio (~43%).

Income Statement

The company has experienced declining revenues over the years, with the latest TTM showing an 8% drop in revenues compared to the previous year. Gross profit margin has been relatively stable but low at approximately 16.2%. Net profit margin is concerning, with the latest TTM showing a significant net loss, indicating profitability challenges. EBIT and EBITDA margins also reflect negative values, suggesting operational inefficiencies and a lack of profitability.

Balance Sheet

The company's debt-to-equity ratio is high at approximately 0.98, indicating a relatively leveraged position which could pose financial risks. Return on equity is negative due to net losses, suggesting inefficiencies in generating returns for shareholders. However, the equity ratio is fairly stable at around 43.4%, reflecting a reasonable level of equity financing relative to total assets.

Cash Flow

The company is facing significant cash flow challenges, with negative operating cash flows and declining free cash flow over the years, indicating liquidity concerns. Free cash flow to net income ratio is unfavorable due to consistent net losses, highlighting cash generation issues. Operating cash flow to net income ratio is also negative, further emphasizing cash flow inefficiencies.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	54.54B	52.93B	57.50B	57.53B	63.55B	58.52B
Gross Profit	8.14B	8.60B	10.52B	9.10B	6.64B	5.63B
EBITDA	1.46B	-3.76B	4.88B	4.37B	-6.77B	-138.00M
Net Income	-6.29B	-6.03B	4.24B	2.40B	-9.57B	-5.74B
Balance Sheet
Total Assets	97.26B	102.75B	105.33B	98.80B	102.64B	115.82B
Cash, Cash Equivalents and Short-Term Investments	12.48B	14.76B	22.57B	19.98B	18.67B	14.78B
Total Debt	41.54B	43.81B	35.72B	33.21B	38.98B	46.51B
Total Liabilities	54.21B	58.14B	53.78B	51.90B	58.40B	64.33B
Stockholders Equity	43.03B	44.60B	50.41B	45.69B	43.14B	50.51B
Cash Flow
Free Cash Flow	0.00	-14.13B	-1.55B	6.27B	8.31B	-289.00M
Operating Cash Flow	0.00	-13.32B	-696.00M	6.47B	9.55B	2.71B
Investing Cash Flow	0.00	-930.00M	1.63B	1.37B	496.00M	-3.10B
Financing Cash Flow	0.00	6.64B	1.40B	-6.61B	-6.64B	2.99B

KATO WORKS CO., LTD. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1317.00
• 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:6390, the sentiment is Positive. The current price of 1317 is below the 20-day moving average (MA) of 1619.90, below the 50-day MA of 1456.16, and below the 200-day MA of 1352.67, indicating a bullish trend. The MACD of 89.10 indicates Positive momentum. The RSI at 59.64 is Neutral, neither overbought nor oversold. The STOCH value of 47.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6390.

KATO WORKS CO., LTD. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6294	74 Outperform	¥19.79B	12.45	―	3.29%	-1.36%	5.14%
6395	70 Outperform	¥176.47B	9.61	5.59%	2.86%	10.49%	-5.19%
6345	70 Outperform	¥92.32B	16.14	―	4.79%	1.68%	18.85%
6358	70 Outperform	¥18.79B	38.51	―	5.14%	-13.63%	-74.53%
7226	67 Neutral	¥121.23B	47.46	―	5.07%	13.71%	-77.02%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6390	51 Neutral	¥19.57B	4.13	―	5.40%	-2.22%	18.80%

KATO WORKS CO., LTD. Corporate Events

Kato Works Swings to Profit Despite Operating Loss, Keeps ¥70 Dividend Outlook

Kato Works reported consolidated net sales of ¥37.3 billion for the nine months to Dec. 31, 2025, up 1.3% year on year, but swung to an operating loss of ¥1.87 billion and an ordinary loss of ¥1.39 billion. Despite this, profit attributable to owners of the parent rebounded sharply to ¥5.63 billion from a ¥4.83 billion loss a year earlier, aided by non-operating factors and changes in accounting policies.

Total assets fell to ¥96.5 billion while the equity ratio improved to 45.0%, reflecting a leaner balance sheet and continued financial stability. The company maintained its dividend stance, projecting an annual payout of ¥70 per share for the year ending March 31, 2026, and revised its full-year forecast to ¥57.0 billion in sales with a small operating loss but solid bottom-line profit of ¥5.8 billion, signaling ongoing shareholder returns amid earnings volatility.

The most recent analyst rating on (JP:6390) stock is a Hold with a Yen1446.00 price target. To see the full list of analyst forecasts on KATO WORKS CO., LTD. stock, see the JP:6390 Stock Forecast page.

KATO WORKS Finalizes Employee Stock Ownership Plan to Enhance Corporate Value

KATO WORKS CO., LTD. has finalized the details of its Employee Stock Ownership Plan (ESOP) Support Trust, which aims to boost corporate value by enhancing employee welfare and engagement with the company’s share price. The plan involves a trust agreement with Resona Bank to ensure a stable supply of company stock to employees, with the trust period set from December 18, 2025, to December 17, 2030.

The most recent analyst rating on (JP:6390) stock is a Hold with a Yen1248.00 price target. To see the full list of analyst forecasts on KATO WORKS CO., LTD. stock, see the JP:6390 Stock Forecast page.

KATO WORKS CO., LTD. Announces Treasury Share Disposal to Support Employee Stock Ownership Plan

KATO WORKS CO., LTD. announced the disposal of 420,000 treasury shares through a third-party allotment to support its Employee Stock Ownership Plan (ESOP). This move aims to enhance long-term corporate value by ensuring a stable supply of shares to employees, thereby increasing their motivation and awareness of the company’s share price. The disposal is structured to minimize market impact and is part of a broader strategy to improve employee welfare benefits.

The most recent analyst rating on (JP:6390) stock is a Hold with a Yen1248.00 price target. To see the full list of analyst forecasts on KATO WORKS CO., LTD. stock, see the JP:6390 Stock Forecast page.