Kawasaki Heavy Industries (7012) AI Stock Analysis

• Market Cap: ¥3.06T
• Dividend Yield: 1.4%
• Average Volume (3M): 5.36M
• Price to Earnings (P/E): 27.8
• Beta (1Y): 2.18
• Revenue Growth: 14.12%
• EPS Growth: 54.64%
• Country: JP
• Employees: 39,689
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): N/A
• 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: ¥17,731.73
• Price Target Upside: -2.87% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 64 Neutral
• Price Target: ¥19,528.00 ▲(6.97% Upside)
• Action: Reiterated Date: 02/11/26
• Date: Action: Reiterated 02/11/26

The score is driven primarily by improving fundamentals (strong revenue and earnings recovery), tempered by leverage and inconsistent cash-flow conversion. Technically, the stock is in a strong uptrend but appears overbought, raising near-term volatility risk. Valuation is only fair with a modest dividend yield.

Positive Factors

Revenue & Earnings Recovery

A clear top-line and earnings recovery to TTM revenue of 2.28T and net income of 109.7B reflects improved project execution and demand across segments. That scale supports recurring aftermarket and service revenue, strengthens pricing leverage, and creates a more durable earnings base over months.

Diversified Industrial Portfolio

Kawasaki's broad exposure across rolling stock, aerospace, energy, industrial robots, marine and motorcycles spreads cyclical risk and provides multiple revenue engines. Structural diversification enhances resilience to single-market downturns and allows cross-selling of long-life aftermarket services that generate recurring cash.

Improving Return on Equity

A material rise in ROE to ~13.4% TTM signals stronger capital efficiency and improved profitability from management actions or mix shifts. Sustained ROE improvement supports the firm's ability to reinvest, pay down debt selectively, or return cash to shareholders over a multi-month horizon if maintained.

Negative Factors

Elevated Leverage

Meaningful leverage (debt-to-equity ~1.15) leaves the company exposed to interest-rate and refinancing risk and reduces strategic flexibility. In cyclical industrial markets, elevated debt can amplify earnings swings and constrain capital allocation during weaker demand stretches over the medium term.

Inconsistent Cash Conversion

Weak and volatile conversion of earnings into free cash flow (FCF ~15% of net income TTM; past negative FCF) indicates working-capital and investment timing risk. Persistent inconsistency limits capacity to deleverage, sustain dividends, or fund capex from operations without external financing in downturns.

Margin Volatility & Modest Profitability

Although margins improved, historical volatility and still-modest net margins reduce predictability of profits and cash flow. Project-based contracts, cyclical end-markets and execution risk mean margins can reverse, creating medium-term pressure on cash generation and return stability.

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

Improving profitability and growth (revenue up to 2.28T TTM and net income up to 109.7B TTM) support the score, but leverage remains meaningful (debt-to-equity ~1.15) and cash-flow conversion is weak/volatile (TTM FCF ~15% of net income; prior years showed negative FCF).

Income Statement

Profitability and growth have improved meaningfully versus prior years. Revenue rose from 1.50T (2022) to 2.13T (FY2025 annual) and 2.28T in TTM (Trailing-Twelve-Months), with a sharp step-up in net income (from 25.4B in FY2024 to 88.0B in FY2025 annual and 109.7B in TTM). Margins also strengthened from FY2024 to FY2025 (net margin ~1.4% to ~4.1%), and TTM maintains a solid ~4.3% net margin. The main weakness is margin volatility and still-modest net profitability for an industrial manufacturer (including losses in FY2021), and TTM operating margin is lower than FY2025 annual (suggesting some near-term pressure).

Balance Sheet

The balance sheet shows improving shareholder returns, with return on equity rising from ~4.0% (FY2024) to ~12.5% (FY2025 annual) and ~13.4% in TTM (Trailing-Twelve-Months). However, leverage is meaningful: debt is ~1.05T in TTM against equity of ~0.81T (debt-to-equity ~1.15), which is better than the FY2023–FY2025 annual range (~1.27–1.36) but still elevated for cyclicality risk. Asset growth is steady, but the company remains reliant on debt funding, which can amplify earnings swings if conditions soften.

Cash Flow

Cash generation is positive in the latest periods but has been inconsistent. TTM (Trailing-Twelve-Months) operating cash flow is 146.5B and free cash flow is 46.9B, with strong free-cash-flow growth versus the prior year, and FY2025 annual also shows positive free cash flow (50.3B). The key concern is conversion of earnings into cash: TTM free cash flow is only ~15% of net income, and operating cash flow relative to revenue remains low (high single-digit percent range). History also shows volatility with negative free cash flow in FY2023 and FY2024, indicating working-capital or investment swings that can pressure liquidity in weaker cycles.

Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	2.28T	2.13T	1.85T	1.73T	1.50T	1.49T
Gross Profit	438.66B	431.54B	312.24B	333.82B	253.26B	191.16B
EBITDA	245.35B	239.98B	130.22B	154.01B	109.92B	50.36B
Net Income	109.69B	88.00B	25.38B	53.03B	12.64B	-19.33B
Balance Sheet
Total Assets	3.29T	3.02T	2.68T	2.46T	2.17T	1.96T
Cash, Cash Equivalents and Short-Term Investments	108.75B	144.55B	95.18B	138.42B	119.12B	126.70B
Total Debt	1.05T	889.51B	845.23B	785.26B	501.48B	571.35B
Total Liabilities	2.41T	2.29T	2.03T	1.86T	1.65T	1.48T
Stockholders Equity	807.69B	702.91B	634.09B	576.20B	505.48B	465.33B
Cash Flow
Free Cash Flow	46.94B	50.26B	-48.40B	-35.33B	97.95B	-17.09B
Operating Cash Flow	146.54B	148.94B	31.66B	23.62B	156.89B	34.60B
Investing Cash Flow	-127.76B	-111.20B	-89.81B	-77.46B	-58.40B	-37.39B
Financing Cash Flow	-42.85B	9.61B	12.91B	85.31B	-108.90B	23.09B

Kawasaki Heavy Industries Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18255.00
• 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:7012, the sentiment is Positive. The current price of 18255 is above the 20-day moving average (MA) of 16388.25, above the 50-day MA of 13885.00, and above the 200-day MA of 11119.60, indicating a bullish trend. The MACD of 1124.67 indicates Positive momentum. The RSI at 65.84 is Neutral, neither overbought nor oversold. The STOCH value of 46.70 is Neutral, 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
6841	78 Outperform	$1.67T	27.48	11.96%	1.21%	4.63%	12.32%
6594	69 Neutral	¥2.82T	23.56	6.88%	0.97%	5.35%	26.51%
7013	67 Neutral	¥4.64T	37.70	26.54%	0.71%	-1.66%	19.02%
6361	66 Neutral	¥2.53T	33.32	16.00%	1.38%	13.96%	12.97%
7012	64 Neutral	¥3.06T	27.84	13.25%	1.40%	14.12%	54.64%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6302	59 Neutral	$756.21B	23.98	0.59%	2.95%	-2.67%	-85.21%

Kawasaki Heavy Industries Corporate Events

Furukawa to Acquire Kawasaki Heavy Industries’ EarthTechnica Unit in Two-Stage Share Transfer

Kawasaki Heavy Industries and Furukawa have signed a definitive share transfer agreement for EarthTechnica Co., Ltd., a Kawasaki subsidiary specializing in crushing, grinding, and sorting equipment. The transaction will occur in two stages, with Furukawa first acquiring 60% of EarthTechnica’s shares and later the remaining 40%, ultimately making EarthTechnica a core operating company within the Furukawa group.

Furukawa aims to integrate EarthTechnica’s advanced technologies and strong customer base to boost its industrial machinery segment, improving technological strength, productivity, cost competitiveness, and service capabilities. The deal is also expected to accelerate Furukawa’s expansion in the environmental recycling sector and global mining and quarry markets by combining both firms’ sales and service networks, while Kawasaki Heavy Industries sees the transfer as the best path for EarthTechnica’s growth and for unlocking synergies in environmental and overseas businesses.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 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 Sets Five-for-One Stock Split and Expands Authorized Shares

Kawasaki Heavy Industries has approved a five-for-one stock split of its common shares, effective April 1, 2026, for shareholders of record on March 31, 2026. The move is designed to lower the per-share price and create a more investor-friendly trading unit, with the aim of broadening the company’s shareholder base.

Following the split, the number of issued shares will increase from 167,921,800 to 839,609,000, while stated capital will remain unchanged. In tandem, the company will amend its Articles of Incorporation to raise the aggregate number of authorized shares to 1,680,000,000, a structural change that enhances flexibility for future equity-related measures and capital policy.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 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 Lifts Dividend as It Adopts DOE-Based Payout Policy

Kawasaki Heavy Industries has revised its shareholder return policy, shifting from a 30% consolidated payout ratio to a new framework based on a 4% dividend on equity ratio. The change is intended to make dividends less sensitive to single-year performance and provide greater predictability and stability for long-term shareholders.

In line with the new policy, the company raised its year-end dividend forecast for the fiscal year ending March 2026 to ¥91 per share, up ¥16 from the previous projection. This increase brings the total annual dividend forecast to ¥166 per share, underscoring a stronger commitment to shareholder returns while continuing to prioritize strategic investment for long-term corporate value growth.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 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 Lifts FY2025 Profit Outlook on FX Gains, Confirms Record Guidance

Kawasaki Heavy Industries reported third-quarter FY2025 business profit of 82.4 billion yen, up year on year and already achieving 57% of its full-year target, driven by strong results in Aerospace Systems and Energy Solution & Marine segments that offset weakness in Power Systems & Energy due to adverse U.S. tariff policies. The company kept its record full-year business profit forecast of 145.0 billion yen and maintained its foreign exchange assumption, while raising profit attributable to owners of parent to 90.0 billion yen on realized foreign exchange gains, and flagged an update to its shareholder returns policy alongside a planned stock split, underscoring confidence in earnings momentum and a shareholder-friendly stance.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 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 Lifts Profit, Forecasts and Dividends on Strong Nine-Month Results

Kawasaki Heavy Industries reported strong consolidated results for the nine months to December 31, 2025, with revenue rising 14.5% year on year to ¥1.41 trillion and profit attributable to owners of the parent jumping 51.6% to ¥70.1 billion. The group also strengthened its financial position, lifting total assets to ¥3.29 trillion and equity attributable to owners to ¥807.7 billion, while improving its equity ratio to 24.6%.

Reflecting the earnings momentum, the company raised its full-year forecast for the year ending March 31, 2026, now targeting ¥2.34 trillion in revenue and ¥90 billion in profit attributable to owners, and revised its dividend outlook upward to a total of ¥166 per share. These upgrades signal management’s confidence in sustained profitability and cash generation, underpinning a higher shareholder return policy and reinforcing Kawasaki’s competitive standing in its industrial markets.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 price target. To see the full list of analyst forecasts on Kawasaki Heavy Industries stock, see the JP:7012 Stock Forecast page.

Kawasaki and WMATA Settle 7000-Series Railcar Disputes After NTSB Report

Kawasaki Heavy Industries’ U.S. railcar subsidiary, Kawasaki Rail Car, Inc., and its parent Kawasaki Railcar Manufacturing Co., Ltd. have resolved contractual disputes with WMATA related to the 7000-series railcars that were involved in a 2021 derailment. Following a U.S. National Transportation Safety Board final report in January 2024 that did not attribute responsibility for the derailment to the Kawasaki group, the parties continued negotiations and have now agreed to reduce WMATA’s performance bond, secure partial payment of contractual sums tied to reliability and maintainability benchmarks, and lower the overall amounts payable by WMATA under the 7000-series contracts, while affirming their ongoing partnership for the program; Kawasaki has already factored the financial impact of this settlement into its earnings forecast for the fiscal year ending March 2026.

The most recent analyst rating on (JP:7012) stock is a Buy with a Yen13943.00 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 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.