Kawasaki Heavy Industries (7012) AI Stock Analysis

• Market Cap: ¥2.16T
• Dividend Yield: 1.4%
• Average Volume (3M): 5.36M
• Price to Earnings (P/E): 22.4
• Beta (1Y): 2.12
• Revenue Growth: 14.12%
• EPS Growth: 54.64%
• Country: JP
• Employees: 39,689
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 106.77
• Shares Outstanding: 167,921,800
• 10 Day Avg. Volume: 5,883,960
• 30 Day Avg. Volume: 5,358,010
• PEG Ratio: 0.07
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 0.70
• P/FCF Ratio: 29.75
• 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: ¥14,314.45
• Price Target Upside: 11.18% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: ¥13,689.00 ▲(6.32% Upside)

The score is driven primarily by solid underlying financial performance, tempered by weakening free cash flow and meaningful leverage. Technicals remain strong but appear overheated, and valuation is only moderately attractive with a relatively high P/E and low dividend yield.

Positive Factors

Diversified business model & recurring aftermarket

Kawasaki's multi-segment industrial model (rail, aerospace, energy, robots, marine, motorcycles) plus lifecycle services creates multiple, complementary revenue streams. High-value projects plus recurring MRO and spare-parts demand provide durable cash flow buffers and reduce single-market cyclicality.

Strong return on equity

ROE around 11.2% indicates the company converts shareholder capital into profit effectively across capital-intensive businesses. Sustained ROE supports reinvestment in engineering, R&D and aftermarket capabilities, underpinning competitive positioning in complex industrial markets.

Solid revenue trajectory

Elevated revenue growth metrics reflect expanding order flow and end-market demand across Kawasaki's diversified portfolio. Durable top-line momentum enables scale benefits, supports long-term investment in product development and service networks, and helps absorb cyclical weakness in pockets.

Negative Factors

Sharp decline in free cash flow

A ~36% fall in FCF materially reduces internal funding for capex, fleet support and strategic M&A. For an engineering and services firm that relies on project completion and aftermarket spend, persistent FCF weakness can constrain reinvestment, hurt liquidity cushions and force more external financing.

Elevated leverage

Debt-to-equity ~1.15 implies material leverage for a cyclical industrial. High debt increases interest and refinancing exposure, reducing financial flexibility to pursue large projects or absorb contract delays. Rising rates or cash-flow hiccups could pressure credit metrics and investment plans.

Margin pressure / declining operating margins

Declining EBIT/EBITDA and a modest drop in gross margin signal operational or pricing pressures in core businesses. Persistent margin erosion would impair cash generation and ROE, limiting the company's ability to fund R&D, service networks and cushion cyclical downturns without cost or pricing remediation.

Kawasaki Heavy Industries Business Overview & Revenue Model

Company Description

Kawasaki Heavy Industries, Ltd. engages in aerospace systems, energy solution and marine engineering, precision machinery and robot, rolling stock, and motorcycle and engine businesses in Japan and internationally. It manufactures aircraft for the Japan ministry of defense; helicopters; and helicopter engines and jet engines for commercial aircrafts. The company also manufactures railway cars; a range of rolling stocks, including Shinkansen, electric cars, passenger coaches, freight cars, locomotives, diesel locomotives, transit systems, and snow plows. In addition, it engages in the production and sale of energy-related machinery and systems, marine machinery and systems, industrial equipment, environmental equipment, ultralow temperature tanks, hydrogen-related structures, crushers, ships, other vessels, etc. Further, the company manufactures and supplies motorcycles, off-road four wheelers, watercrafts, general-purpose gasoline engines, etc. Additionally, it manufactures and sells hydraulic machinery used in construction and agricultural machinery, industrial machinery, and ships; pumps, motors, valves, and various hydraulic machinery, as well as assembles hydraulic systems; and industrial robots for use in welding, assembly, handling, painting, and palletization for various industries, including automotive and electronics industries. Kawasaki Heavy Industries, Ltd. was founded in 1878 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Kawasaki Heavy Industries generates revenue through multiple key streams across its diverse business segments. The aerospace and defense division contributes significantly through contracts for military and commercial aircraft, as well as missile and defense systems. The rolling stock segment earns revenue from the production of trains and related infrastructure. Shipbuilding generates income from the construction of commercial and naval vessels. The industrial equipment segment provides machinery and systems for various industries, while the energy systems division focuses on power generation and environmental solutions. Strategic partnerships with governments and other corporations, along with long-term contracts, play a crucial role in stabilizing revenue, particularly in the defense and aerospace sectors, where projects often span several years.

Kawasaki Heavy Industries Financial Statement Overview

Summary

Solid revenue growth and stable profitability, supported by strong ROE. However, free cash flow fell sharply and leverage remains elevated, increasing financial risk if conditions tighten.

Income Statement

Kawasaki Heavy Industries shows a solid revenue growth rate of 3.12% in the TTM, indicating a positive trajectory. The gross profit margin is healthy at 19.02%, although it has slightly decreased from the previous year. The net profit margin is stable at 4.30%, reflecting consistent profitability. However, the EBIT and EBITDA margins have declined compared to the previous year, which could indicate rising operational costs or pricing pressures.

Balance Sheet

The company's debt-to-equity ratio is 1.15, showing a slight improvement from the previous year, indicating better leverage management. Return on equity is strong at 11.20%, suggesting effective use of equity to generate profits. The equity ratio is stable, reflecting a balanced capital structure. However, the high level of total debt remains a potential risk if interest rates rise or cash flows decrease.

Cash Flow

Operating cash flow is robust, but the free cash flow has decreased significantly by 36.21% in the TTM, which could impact future investment capabilities. The operating cash flow to net income ratio is low, indicating that not all net income is being converted into cash. The free cash flow to net income ratio is also low, suggesting limited cash available after capital expenditures.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.24T	2.13T	1.85T	1.73T	1.50T	1.49T
Gross Profit	426.23B	431.54B	312.24B	333.82B	253.26B	191.16B
EBITDA	214.52B	239.98B	130.22B	154.01B	109.92B	50.36B
Net Income	96.42B	88.00B	25.38B	53.03B	12.64B	-19.33B
Balance Sheet
Total Assets	3.07T	3.02T	2.68T	2.46T	2.17T	1.96T
Cash, Cash Equivalents and Short-Term Investments	86.45B	144.55B	95.18B	138.42B	119.12B	126.70B
Total Debt	878.03B	889.51B	845.23B	785.26B	501.48B	571.35B
Total Liabilities	2.25T	2.29T	2.03T	1.86T	1.65T	1.48T
Stockholders Equity	761.79B	702.91B	634.09B	576.20B	505.48B	465.33B
Cash Flow
Free Cash Flow	23.64B	50.26B	-48.40B	-35.33B	97.95B	-17.09B
Operating Cash Flow	159.83B	148.94B	31.66B	23.62B	156.89B	34.60B
Investing Cash Flow	-131.05B	-111.20B	-89.81B	-77.46B	-58.40B	-37.39B
Financing Cash Flow	-87.14B	9.61B	12.91B	85.31B	-108.90B	23.09B

Kawasaki Heavy Industries Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 12875.00
• 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:7012, the sentiment is Positive. The current price of 12875 is below the 20-day moving average (MA) of 13059.50, above the 50-day MA of 11652.24, and above the 200-day MA of 10309.96, indicating a neutral trend. The MACD of 430.41 indicates Positive momentum. The RSI at 52.98 is Neutral, neither overbought nor oversold. The STOCH value of 12.71 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7012.

Kawasaki Heavy Industries Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6104	81 Outperform	¥93.53B	44.43	5.02%	3.23%	-10.00%	-51.92%
6361	71 Outperform	¥2.15T	28.65	16.00%	1.38%	13.96%	12.97%
7013	70 Outperform	¥3.85T	29.23	26.54%	0.71%	-1.66%	19.02%
7012	66 Neutral	¥2.16T	22.35	13.25%	1.40%	14.12%	54.64%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
5631	59 Neutral	€628.28B	28.50	11.66%	1.03%	10.11%	41.98%
6302	59 Neutral	¥589.98B	174.16	0.59%	2.95%	-2.67%	-85.21%

Kawasaki Heavy Industries Corporate Events

Kawasaki Heavy Industries Concludes Misconduct Probes on Submarine Repairs and Engine Testing

Kawasaki Heavy Industries has released final investigation reports into misconduct involving submarine repairs at its Kobe Shipyard and fuel efficiency testing of submarine engines manufactured up to 2021, following earlier disclosures in 2024 and 2025. The company has completed the work of two Special Investigative Committees led by external legal experts, acknowledged inaccurate work-hour records and other compliance breaches, and is implementing group-wide measures to prevent recurrence under a Special Compliance Promotion Committee chaired by the president, focused on strengthening systems to prevent misconduct, improving detection, and reforming organizational culture. Kawasaki is still assessing whether the findings will affect its financial results and has pledged to prioritize restoring trust and enhancing governance in response to repeated compliance issues.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen12133.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries Reports Record Revenue Amid Profit Challenges

Kawasaki Heavy Industries reported a record revenue of 996.2 billion yen for the second quarter of FY2025, despite a decline in business profit due to yen appreciation and higher tariffs. The company raised its full-year revenue forecast to 2,340.0 billion yen, maintaining its business profit forecast at 145.0 billion yen, with expectations of stronger performance in the second half driven by defense contracts and increased after-sales services for aircraft engines.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13000.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki Heavy Industries Reports Strong Half-Year Results with Revised Earnings Forecast

Kawasaki Heavy Industries announced its consolidated financial results for the six months ending September 30, 2025. The company reported a notable increase in revenue and profit compared to the previous year, reflecting strong operational performance. Despite the positive financial results, the company revised its earnings forecast for the fiscal year ending March 31, 2026, indicating adjustments in its financial expectations. The announcement underscores Kawasaki’s efforts to maintain its competitive position in the market while adapting to changing economic conditions.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13000.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.