I
The margin recovery is complete; the next leg needs cost discipline
Gross margin is back to , close to FY2018's . The gap to the operating-margin target is overhead: SG&A rose from to of sales while the sales force grows.
Initiation of coverage · · By James Pieter Djibu
MakitaCorporation
Great franchise, fairly priced. The margin recovery is done; recent growth came from the yen.
Student research by James Pieter Djibu, BSc Economics, Nagoya University. 6586 JP · IFRS · JPY. Not investment advice.
01 · Investment thesis
Three reasons to hold, not chase
Makita owns one of the strongest battery-tool platforms in the world and a fortress balance sheet. The price already reflects the recovery.
II
Growth is currency, not volume
Europe is of sales and shrank in local currency in FY2026. 1Q FY2027 revenue rose in yen but was flat in local currency, while Milwaukee grew .
III
The balance sheet is the lever
Net cash of caps ROE at against an target. The stock trades on EV/EBITDA, below its own median: limited downside, buybacks are the trigger.
⇄
What would make me wrong
Turn to Buy
Operating margin heads to 15% without giving up growth; a sustained ~10% weaker yen; large buybacks lifting ROE toward 11%.
Turn to Sell
A second inventory cycle: inventory days above 300, European local-currency sales falling more than 3%, gross margin back to 34-35%.
02 · Nine years of IFRS numbers
What the numbers say
Parsed from Makita's own filings, checked by accounting tests. Hover any chart for values.
Revenue and margins
Revenue grew every year but one; operating margin is still below the FY2018 level.
Source: Makita earnings releases (IFRS). JPY bn; margins in %.
The inventory cycle
Inventory peaked at before the FY2023 margin collapse; it is again.
Source: Makita earnings releases. Year-end inventory / cost of sales x 365.
Where the revenue comes from
Europe , North America only .
Source: Makita earnings releases, revenue by customer location.
Returns
ROIC , ROE : surplus equity dilutes returns.
Source: student analysis of Makita filings; DuPont on average parent equity.
- 01
Over the cycle, only of profit became free cash. Inventory and capex absorbed the rest; a DCF that assumes full conversion overvalues Makita.
- 02
The aftermarket is the quiet moat. Parts, repairs and accessories rose from to of revenue: an installed base that keeps buying.
- 03
Supply chain is still China-heavy. of units are made in China, down from about 70%, which keeps US tariffs a live risk.
03 · Valuation
Two DCFs that agree, a little above the market
Driver-based DCF from 1 July 2026, mid-period discounting, value-driver terminal value. The exit multiple is set so both terminal methods agree. Peers trade on higher multiples, but they grow faster and earn more.
Cost of capital
From cash flows to a target price
Football field
JPY per share. Gold: DCF; blue: multiples; grey: 52-week range. Line: price. Dashed: target.
Source: student model (Football sheet); peers from yfinance, converted to JPY.
Sensitivity: WACC vs terminal growth
DCF (Gordon) value per share, JPY. Gold cell = base.
Peers
Last reported fiscal year; multiples recomputed in JPY.
04 · Risks and catalysts
Margins matter more than the yen
Each bar re-runs the full Excel model with one driver shocked. A 200bp gross-margin slip is worth more than three times a 10% yen move.
Change in 12-month target price, JPY per share. Source: src/risks.py.
05 · Method
Every number is traceable
Raw filings are saved untouched, parsed by code, checked, and fed into an Excel model with live formulas. Hover a dotted number on this page to see its source.
- 01
Collect
Makita IFRS releases and audited statements, MoF JGB yields, Damodaran, SEC, yfinance. Every file logged with a checksum.
- 02
Parse and check
PDF statements parsed to tidy tables; integrity checks; restatements flagged.
- 03
Model
Three statements, regional revenue x FX, DCF, comps and sensitivities in Excel, recalculated headlessly; all checks pass in all scenarios.
- 04
Publish
The PDF report, this site and the model are generated from the same outputs.