# Kobe Steel (5406.JP)

Canonical: https://gigainvestors.com/s/5406.JP

Analysis as of: 2026-10-15T07:10:38.042Z. Financial observations: FY2013–FY2026.

Listing currency: JPY. Reporting currency: JPY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: JPY 1,987.00 per share; close as of 2026-10-15.

Estimated value: low JPY 2,273.67 per share, central JPY 2,538.00 per share, high JPY 2,889.88 per share. Buy at or below the central value JPY 2,538.00 per share. Valuation as of 2026-10-15T07:10:38.042Z; scenarios are not confidence intervals.

Expected annual return: 12.5% at the stated quote. About 12.5% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; JP 10-year bond 2.9% + 4 points).

## Checklist

### understandable: fail

- 4 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 2

- Operating margin variation: 0.60×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.01×

- FY2018: 0.05×

- FY2019: 0.02×

- FY2020: 0.01×

- FY2021: 0.02×

- FY2022: 0.04×

- FY2023: 0.03×

- FY2024: 0.07×

- FY2025: 0.06×

- FY2026: 0.05×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 4.4%

- ROIC, second-lowest year: 0.6%

- Typical minus recent gross margin: -2.4 pp

- Typical gross margin (annual median): 14.2%

- Recent gross margin (lower of latest and 3-year median): 16.5%

- Years with nonpositive capital: 0

- Capital spending / revenue: 7.0%

- ROIC including acquisitions, ten-year median: 3.3%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 0.6%

- FY2018: 5.8%

- FY2019: 2.9%

- FY2020: 0.6%

- FY2021: 2.2%

- FY2022: 4.6%

- FY2023: 4.2%

- FY2024: 8.4%

- FY2025: 7.4%

- FY2026: 5.7%

### economics: fail

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: 0.94×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: JPY 429B

- Net income, five-year total: JPY 456B

- Return on incremental invested capital: 7.9%

- Working capital / revenue, annual change: 1.2 pp

- Working capital / revenue, change between three-year averages: 9.5 pp

- Working capital / revenue, final three-year average: 27.1%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 0.83×

- FY2023: 0.97×

- FY2024: 1.14×

- FY2025: 1.00×

- FY2026: 0.68×

### management: pass

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 2.9% vs 7.4%

- Per-share earnings: -59.34 to 277.38 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 0.8%

- Ordinary dilution, 5-year annual growth: 1.7%

- Market cap gain: JPY 376B

- Cumulative retained earnings: JPY 357B

- Diluted shares, 10-year annual growth: 0.8%

- Diluted shares, 5-year annual growth: 1.7%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: JPY 336.72

- Per-share value, starting three-year median: JPY -59.34

- Per-share value, ending three-year median: JPY 277.38

- Buybacks concentrated in cheaper years (correlation): -0.50

- Average buyback yield: 0.2%

- Buyback history: 5 years

- Debt-funded buybacks: No

- Acquisition spending: JPY 47B

- Cumulative net income, 10 years: JPY 487B

- ROIC, first three-year median: 2.9%

- ROIC, last three-year median: 7.4%

Chart: Earnings per share; fiscal year observations.

- FY2017: JPY -63.54

- FY2018: JPY 174.43

- FY2019: JPY 99.20

- FY2020: JPY -187.55

- FY2021: JPY 64.05

- FY2022: JPY 160.23

- FY2023: JPY 183.80

- FY2024: JPY 277.38

- FY2025: JPY 304.64

- FY2026: JPY 237.80

### accounting: pass

- Sloan accruals: -3.8%

- Receivables to sales index (DSRI): 1.09×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 2.15×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.05×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -7.1%

- FY2018: -5.4%

- FY2019: -1.3%

- FY2020: -3.9%

- FY2021: -6.6%

- FY2022: -4.0%

- FY2023: -1.6%

- FY2024: -3.3%

- FY2025: -1.0%

- FY2026: -3.8%

## Holders

## Price story

Price needs cash profits to shrink 2.8% a year for ten years · sales -4.6%

Story as of 2026-10-16T10:00:14.357Z; price observation 2026-10-15.

Price needs cash profits to shrink 2.8% a year for ten years

### Sales · FY2025–2026

sales -4.6%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf; observed 2026-06-18.

- FY2017: JPY 1.70T 

- FY2018: JPY 1.88T 

- FY2019: JPY 1.97T 

- FY2020: JPY 1.87T 

- FY2021: JPY 1.71T 

- FY2022: JPY 2.08T 

- FY2023: JPY 2.47T 

- FY2024: JPY 2.54T 

- FY2025: JPY 2.56T 

- FY2026: JPY 2.44T 

### Gross margin · FY2026

gross margin 16.5%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf; observed 2026-06-18.

- FY2017: 13.6% 

- FY2018: 15.2% 

- FY2019: 13.5% 

- FY2020: 12.4% 

- FY2021: 13.1% 

- FY2022: 14.8% 

- FY2023: 13.0% 

- FY2024: 17.1% 

- FY2025: 16.6% 

- FY2026: 16.5% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Annual sales are JPY 2.4 trillion.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf (filed 2026-06-18); FY2026: revenue 2436581000000; grossProfit 403224000000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 16.5% to 17.1% during 2024–26; it earns 4.4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2024: grossProfit / revenue = 17.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2025: grossProfit / revenue = 16.6%.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf (filed 2026-06-18); FY2026: grossProfit / revenue = 16.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); 10-year return on capital observations [[2017,0.006066301771675715],[2018,0.05787653107848849],[2019,0.028651673925439148],[2020,0.005500700668193899],[2021,0.022073122027375377],[2022,0.04550680994765005],[2023,0.042272409374773674],[2024,0.08380555404330013],[2025,0.0744310687075921],[2026,0.057128645885235405]]; median 0.04388960966121186. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 15% gross margin through 2022 cost inflation.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf (filed 2026-06-18); Gross margin observations: [[2021,0.1308586123316248],[2022,0.14779874213836477],[2023,0.1299449789444564]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back JPY 3.2 billion of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2018: growth capex 34616000000; upkeep 102032000000; owner earnings 58944000000. Growth capex / owner earnings = 0.5872692725298588.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2019: growth capex 29867000000; upkeep 102589000000; owner earnings 32535000000. Growth capex / owner earnings = 0.9179960043030583.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2022: growth capex 51300000000; upkeep 105147000000; owner earnings 49878000000. Growth capex / owner earnings = 1.0285095633345362.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2023: growth capex 0; upkeep 98964000000; owner earnings 70144000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2024: growth capex 0; upkeep 94865000000; owner earnings 124823000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); FY2025: growth capex 0; upkeep 113266000000; owner earnings 120531000000. Growth capex / owner earnings = 0.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf (filed 2026-06-18); FY2026: growth capex 0; upkeep 124435000000; owner earnings 63396000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); Dividend observations: [[2017,17000000],[2018,8000000],[2019,14509000000],[2020,3730000000],[2021,52000000],[2022,7248000000],[2023,17746000000],[2024,27694000000],[2025,35568000000],[2026,37468000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf (filed 2026-06-18); FY2026: cash repurchases 3164000000 JPY.

### What the price says

The price assumes cash profits shrink 2.8% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-18); Ten-year compound average after fade. Initial solved rate -0.05161420219059659. Price 1987; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share -89.86062442011504 → FY2026 160.86269086718525. Closing-price date 2026-10-15.

## Monthly share-price history (JPY per share)

- 2016-11: JPY 1,079.00 per share

- 2016-12: JPY 1,117.00 per share

- 2017-01: JPY 1,101.00 per share

- 2017-02: JPY 1,091.00 per share

- 2017-03: JPY 1,016.00 per share

- 2017-04: JPY 990.00 per share

- 2017-05: JPY 1,013.00 per share

- 2017-06: JPY 1,154.00 per share

- 2017-07: JPY 1,382.00 per share

- 2017-08: JPY 1,324.00 per share

- 2017-09: JPY 1,286.00 per share

- 2017-10: JPY 950.00 per share

- 2017-11: JPY 1,053.00 per share

- 2017-12: JPY 1,045.00 per share

- 2018-01: JPY 1,132.00 per share

- 2018-02: JPY 1,190.00 per share

- 2018-03: JPY 1,066.00 per share

- 2018-04: JPY 1,132.00 per share

- 2018-05: JPY 1,093.00 per share

- 2018-06: JPY 1,014.00 per share

- 2018-07: JPY 1,097.00 per share

- 2018-08: JPY 930.00 per share

- 2018-09: JPY 1,010.00 per share

- 2018-10: JPY 908.00 per share

- 2018-11: JPY 934.00 per share

- 2018-12: JPY 764.00 per share

- 2019-01: JPY 870.00 per share

- 2019-02: JPY 881.00 per share

- 2019-03: JPY 831.00 per share

- 2019-04: JPY 849.00 per share

- 2019-05: JPY 673.00 per share

- 2019-06: JPY 705.00 per share

- 2019-07: JPY 704.00 per share

- 2019-08: JPY 554.00 per share

- 2019-09: JPY 576.00 per share

- 2019-10: JPY 588.00 per share

- 2019-11: JPY 559.00 per share

- 2019-12: JPY 589.00 per share

- 2020-01: JPY 507.00 per share

- 2020-02: JPY 401.00 per share

- 2020-03: JPY 334.00 per share

- 2020-04: JPY 365.00 per share

- 2020-05: JPY 401.00 per share

- 2020-06: JPY 370.00 per share

- 2020-07: JPY 338.00 per share

- 2020-08: JPY 407.00 per share

- 2020-09: JPY 399.00 per share

- 2020-10: JPY 405.00 per share

- 2020-11: JPY 505.00 per share

- 2020-12: JPY 551.00 per share

- 2021-01: JPY 487.00 per share

- 2021-02: JPY 656.00 per share

- 2021-03: JPY 748.00 per share

- 2021-04: JPY 788.00 per share

- 2021-05: JPY 742.00 per share

- 2021-06: JPY 713.00 per share

- 2021-07: JPY 728.00 per share

- 2021-08: JPY 700.00 per share

- 2021-09: JPY 685.00 per share

- 2021-10: JPY 670.00 per share

- 2021-11: JPY 549.00 per share

- 2021-12: JPY 577.00 per share

- 2022-01: JPY 543.00 per share

- 2022-02: JPY 612.00 per share

- 2022-03: JPY 591.00 per share

- 2022-04: JPY 565.00 per share

- 2022-05: JPY 680.00 per share

- 2022-06: JPY 617.00 per share

- 2022-07: JPY 614.00 per share

- 2022-08: JPY 636.00 per share

- 2022-09: JPY 580.00 per share

- 2022-10: JPY 610.00 per share

- 2022-11: JPY 620.00 per share

- 2022-12: JPY 642.00 per share

- 2023-01: JPY 697.00 per share

- 2023-02: JPY 922.00 per share

- 2023-03: JPY 1,053.00 per share

- 2023-04: JPY 1,007.00 per share

- 2023-05: JPY 1,103.00 per share

- 2023-06: JPY 1,320.50 per share

- 2023-07: JPY 1,552.00 per share

- 2023-08: JPY 1,830.00 per share

- 2023-09: JPY 1,949.00 per share

- 2023-10: JPY 1,762.00 per share

- 2023-11: JPY 1,731.50 per share

- 2023-12: JPY 1,824.50 per share

- 2024-01: JPY 2,057.00 per share

- 2024-02: JPY 2,051.00 per share

- 2024-03: JPY 2,052.50 per share

- 2024-04: JPY 1,933.50 per share

- 2024-05: JPY 2,039.50 per share

- 2024-06: JPY 1,996.50 per share

- 2024-07: JPY 1,886.00 per share

- 2024-08: JPY 1,788.50 per share

- 2024-09: JPY 1,711.50 per share

- 2024-10: JPY 1,659.50 per share

- 2024-11: JPY 1,553.00 per share

- 2024-12: JPY 1,579.00 per share

- 2025-01: JPY 1,659.00 per share

- 2025-02: JPY 1,770.00 per share

- 2025-03: JPY 1,730.00 per share

- 2025-04: JPY 1,669.00 per share

- 2025-05: JPY 1,663.50 per share

- 2025-06: JPY 1,574.00 per share

- 2025-07: JPY 1,663.50 per share

- 2025-08: JPY 1,815.00 per share

- 2025-09: JPY 1,748.50 per share

- 2025-10: JPY 1,816.50 per share

- 2025-11: JPY 1,952.50 per share

- 2025-12: JPY 2,071.00 per share

- 2026-01: JPY 2,226.50 per share

- 2026-02: JPY 2,275.00 per share

- 2026-03: JPY 1,890.00 per share

- 2026-04: JPY 1,926.50 per share

- 2026-05: JPY 1,980.00 per share

- 2026-06: JPY 1,872.50 per share

- 2026-07: JPY 2,077.00 per share

- 2026-08: JPY 2,020.00 per share

- 2026-09: JPY 2,048.00 per share

- 2026-10: JPY 2,021.50 per share

## Annual estimated value (JPY per share)

- FY2022: low JPY 1,585.77 per share, central JPY 1,723.87 per share, high JPY 1,907.71 per share

- FY2023: low JPY 1,553.96 per share, central JPY 1,756.83 per share, high JPY 1,980.01 per share

- FY2024: low JPY 2,305.25 per share, central JPY 2,595.65 per share, high JPY 2,924.60 per share

- FY2025: low JPY 2,563.18 per share, central JPY 3,018.67 per share, high JPY 3,446.93 per share

- FY2026: low JPY 2,273.67 per share, central JPY 2,538.00 per share, high JPY 2,889.88 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original EDINET filing](https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YCDA.pdf); period 2026-03-31, filed 2026-06-18.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.

## Reported holder observations