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): 0.5
• 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: ¥1,567.00 ▲(18.98% 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

Gross margin stability

A roughly 16% gross margin provides a persistent gross-profit buffer for manufacturing costs and product economics in agricultural machinery. That stable margin supports product-level economics and gives the company time to address volume or overhead pressure over the next several months.

Stable equity ratio

A ~43% equity ratio indicates a meaningful equity base versus assets, which creates a capital cushion against cyclical shocks. This structural capitalization helps preserve borrowing capacity and absorb short-term losses while reorganizing operations or securing financing.

Established operational scale

Nearly 1,000 employees reflect a material manufacturing and service footprint, institutional know-how and capacity to support aftermarket and production continuity. That operational scale is a durable asset in the agricultural machinery market for product support and ramping volumes.

Negative Factors

Declining revenue trend

An ~8% TTM revenue decline signals weakening demand or market share loss in core machinery sales. Sustained top-line contraction reduces operating leverage, limits reinvestment capacity, and increases reliance on cost cuts or restructuring to restore profitability over the medium term.

Negative operating and free cash flow

Persistent negative operating and free cash flow erode liquidity and constrain capital spending, R&D or working capital needs. Over a 2-6 month horizon this forces reliance on external financing or asset sales and raises risk of covenant pressure given existing leverage.

High leverage with negative returns

Nearly 1.0x debt-to-equity combined with negative ROE from net losses increases solvency and interest burden risks. This structural leverage limits strategic flexibility, raises refinancing risk, and amplifies the impact of continued earnings weakness on balance sheet health.

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: Positive

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 1627.80, below the 50-day MA of 1461.42, and below the 200-day MA of 1354.56, indicating a neutral trend. The MACD of 72.26 indicates Positive momentum. The RSI at 46.66 is Neutral, neither overbought nor oversold. The STOCH value of 17.89 is Positive, 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
6301	75 Outperform	¥6.34T	12.01	―	4.06%	0.40%	8.40%
6432	73 Outperform	¥316.64B	12.67	―	2.99%	0.31%	-11.04%
6395	70 Outperform	¥176.47B	7.33	5.59%	2.86%	10.49%	-5.19%
6305	67 Neutral	¥1.37T	13.34	10.54%	3.98%	-2.72%	29.43%
6326	65 Neutral	¥3.19T	13.56	7.16%	2.22%	-3.22%	-29.63%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6390	51 Neutral	¥19.57B	0.51	―	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.