KMTUY - Komatsu: Signs Of Recovery

• Komatsu's recent 3Q 2020 financial results show signs of recovery with its revenue up +11.3% QoQ, and the recovery is broad-based with almost all of its geographic markets delivering growth.
• Looking ahead, Komatsu's 4Q 2020 and FY 2020 earnings could beat management guidance, considering a better-than-expected recovery in construction machinery demand and cost optimization efforts.
• Komatsu's financial performance would have been worse, if the company did not have revenue contribution from the more resilient parts and services businesses.
• But recovery prospects seem to have been priced in, with Komatsu's share price up +20% in the past three months and the stock trades at a premium to its peers on trailing P/B and forward P/E multiples.

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