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KDDI
(OTC:KDDIY)
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Rating:66Neutral
Price Target:
$19.00
â–²(4.51% Upside)
Action:Downgraded
Date:08/18/26
The score is driven primarily by solid underlying profitability but constrained by increasing leverage and weaker recent free-cash-flow trends. The latest earnings call adds support due to strong Q1 growth, improving mobile KPIs, and AI/cloud momentum, while technicals are mixed and valuation looks reasonable rather than compelling.
Positive Factors
Consistent profitability and positive free cash flow
KDDI reports consistently positive free cash flow and stable margins (gross ~42–45%, net ~11–12%), with FCF covering a meaningful portion of earnings. That cash generation underpins reinvestment, dividend capacity and the ability to fund strategic moves without relying solely on new debt.
Negative Factors
Materially higher leverage
Leverage rising to about 1.06 reduces balance‑sheet flexibility and increases sensitivity to rising funding costs or tighter refinancing markets. Higher debt constrains optionality for opportunistic M&A, increases interest expense risk, and makes capital allocation tradeoffs more acute over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Consistent profitability and positive free cash flow
KDDI reports consistently positive free cash flow and stable margins (gross ~42–45%, net ~11–12%), with FCF covering a meaningful portion of earnings. That cash generation underpins reinvestment, dividend capacity and the ability to fund strategic moves without relying solely on new debt.
Read all positive factors
KDDI (KDDIY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$68.76B
Dividend Yield1.58%
Average Volume (3M)38.55K
Price to Earnings (P/E)15.2
Beta (1Y)0.11
Revenue Growth0.91%
EPS Growth15.30%
CountryUS
Employees73,198
SectorCommunication Services
Sector Strength97
IndustryTelecommunications Services
Share Statistics
EPS (TTM)127.50
Shares Outstanding4,007,451,000
10 Day Avg. Volume54,141
30 Day Avg. Volume38,548
Financial Highlights & Ratios
PEG Ratio2.25
Price to Book (P/B)3.73
Price to Sales (P/S)3.23
P/FCF Ratio19.96
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.25
Revenue Forecast (FY)$39.92B
KDDI Business Overview & Revenue Model
Company Description
KDDI Corporation is a prominent telecommunications firm headquartered in Tokyo, Japan, offering a broad spectrum of communication solutions to both domestic and international markets. Its business is strategically divided into two core segments: P...
How the Company Makes Money
KDDI primarily makes money by selling connectivity and related services to consumers and businesses in Japan. Its largest recurring revenue stream is telecommunications service revenue from mobile subscriptions (voice and, especially, data plans) ...
KDDI Earnings Call Summary
Earnings Call Date:Aug 07, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call reported robust top-line and bottom-line growth in Q1, clear improvements in mobile KPIs (active devices, ARPU, churn), strong momentum in AI/cloud/data center businesses, improved cash generation and a proactive divestment program to fund growth. Key challenges include pressure in the Financial Business from mark-to-market losses and deposit/liquidity management, termination of Rakuten roaming creating some revenue uncertainty, a security incident with regulatory implications, and significant near-term capex/investment needs. On balance, the positive operational and financial momentum and concrete measures to fund growth outweigh the manageable and clearly articulated risks.Positive Updates
Revenue and Profit Growth
Operating revenue up 5.1% year-on-year in Q1 with a 23.2% progress rate vs full-year forecast; adjusted operating income up 21.1% (progress 26.0%); adjusted net income up 21.6% (progress 26.5%).
Negative Updates
Financial Business Earnings Pressure
Au Financial Holdings operating income declined JPY 3.7 billion YoY in Q1; driven by mark-to-market valuation losses related to rising long-term interest rates (roughly JPY 2.4 billion) and challenges in increasing deposit balances; the bank is in a transition with liquidity and loan mix controls.
Read all updates
Q1-2027 Updates
Positive
Negative
Revenue and Profit Growth
Operating revenue up 5.1% year-on-year in Q1 with a 23.2% progress rate vs full-year forecast; adjusted operating income up 21.1% (progress 26.0%); adjusted net income up 21.6% (progress 26.5%).
Read all positive updates
Company Guidance
KDDI said Q1 delivered a strong start to FY3/27 with operating revenue up 5.1% YoY (progress vs full‑year forecast 23.2%), adjusted operating income up 21.1% (progress 26%) and adjusted net income up 21.6% (progress 26.5%); key KPIs include 33.3m active smartphones (+390k YoY), churn 1.17% (‑0.06pp YoY) and mobile ARPU ¥4,400 (+¥160, +3.8%), and management reaffirmed its full‑year communication revenue target of ¥1,210bn. Segment trends: Personal Growth Q1 op. income +9.3% YoY, Business Growth +21.6% YoY; Au Financial Holdings op. income down ¥3.7bn (including ~¥2.4bn mark‑to‑market impact on loans); AI/cybersecurity revenue +19.2% YoY, cloud infra revenue >+30% YoY, Connectivity/Data Center revenue +20.6% YoY with Data Center adj. op. income ¥6.9bn (+¥0.7bn YoY) and EBITDA margin >40%. Cash and investment metrics: operating cash flow margin 21.6%, 11 divestments decided in Q1 generating ~¥150bn, a ¥1tn growth‑investment framework over 3 years and organic CapEx target near 12% of sales; noted one‑off items included a ~¥800m Q1 roaming revenue effect related to Rakuten and promotional spend reductions (≈2/3 of non‑comm profit improvement).KDDI Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
62
Positive
Cash Flow
55
Neutral
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.27T | 6.44T | 5.92T | 5.75T | 5.67T | 5.45T |
| Gross Profit | 2.68T | 2.75T | 2.51T | 2.43T | 2.41T | 2.46T |
| EBITDA | 1.86T | 1.86T | 1.78T | 1.62T | 1.71T | 1.78T |
| Net Income | 761.79B | 749.76B | 685.68B | 637.87B | 679.11B | 672.49B |
Balance Sheet | ||||||
| Total Assets | 18.73T | 19.15T | 16.88T | 14.15T | 11.92T | 11.08T |
| Cash, Cash Equivalents and Short-Term Investments | 781.73B | 1.08T | 921.17B | 887.21B | 844.97B | 1.12T |
| Total Debt | 5.26T | 5.40T | 4.55T | 2.39T | 1.65T | 1.74T |
| Total Liabilities | 13.12T | 13.53T | 11.23T | 8.35T | 6.25T | 5.57T |
| Stockholders Equity | 5.09T | 5.10T | 5.13T | 5.25T | 5.12T | 4.98T |
Cash Flow | ||||||
| Free Cash Flow | 642.39B | 1.28T | 958.47B | 956.97B | 444.74B | 793.08B |
| Operating Cash Flow | 1.05T | 1.71T | 1.25T | 1.71T | 1.08T | 1.47T |
| Investing Cash Flow | -1.01T | -1.15T | -1.18T | -832.43B | -732.48B | -761.59B |
| Financing Cash Flow | -404.67B | -577.29B | -33.55B | -476.48B | -669.84B | -727.26B |
KDDI Technical Analysis
Positive
18.18
Price Trends
17.89
Positive
17.26
Positive
17.17
Positive
Market Momentum
0.28
Negative
65.02
Neutral
96.86
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KDDIY, the sentiment is Positive. The current price of 18.18 is below the 20-day moving average (MA) of 18.22, above the 50-day MA of 17.89, and above the 200-day MA of 17.17, indicating a bullish trend. The MACD of 0.28 indicates Negative momentum. The RSI at 65.02 is Neutral, neither overbought nor oversold. The STOCH value of 96.86 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KDDIY.
KDDI Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $33.72B | 26.96 | 10.22% | 3.68% | 8.46% | 7.38% | |
71 Outperform | $14.64B | 15.07 | 13.16% | 8.27% | -3.37% | -27.49% | |
66 Neutral | $68.76B | 15.17 | 14.91% | 1.58% | 0.91% | 15.30% | |
66 Neutral | $9.74B | 9.40 | 7.21% | 4.12% | 5.40% | 39.37% | |
63 Neutral | $39.27B | -74.17 | -0.79% | 3.18% | 16.69% | 87.12% | |
61 Neutral | $14.53B | 28.18 | 5.74% | 1.64% | -7.65% | -32.07% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% |
* Communication Services Sector Average
KDDIY
KDDI
19.09
2.08
12.24%
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KT
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-0.25
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TLK
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-17.84%
SKM
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VOD
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16.90
5.54
48.81%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.