One-glance verdict
Undervalued
$17.56 our estimate vs market $13.00
Wall Street consensus: $14.65 (-16.6% lower than our fair-value estimate)
26% below our estimate, below the bear case
Fundamentals snapshot
Daikin Industries,Ltd.
DKILY · PNK · Industrials · Building Products & Equipment
Current price
$13.00
52-week range
$11.00 - $16.43
Market cap
$36.18B
Balance sheet
Healthy
10.65x Adequate
Net debt $1.78B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 5.5% last year.
- Reward Returns 9.6% on equity, ahead of 16% of its peers.
- Risk Stock trades 11400.3% above its 5-year average P/E.
- Risk Operating margin compressed from 9.5% to 9.2% over 3 years.
What this company does
Daikin Industries,Ltd.
Daikin Industries is one of the world's largest makers of air conditioning and heating systems for both homes and commercial buildings. The company earns money by selling new units and also generates recurring revenue (predictable, ongoing income) from service and maintenance contracts. This means its success is often tied to global construction activity and the increasing demand for climate control.
How the company got here
Daikin was founded in Osaka, Japan, in 1924 by Akira Yamada, initially making radiator tubes for aircraft. A key shift happened after World War II when the company used its metalworking and chemical expertise to move into air conditioning, developing Japan's first packaged air conditioner in the 1950s. Over the decades, Daikin grew by focusing on technological innovation, like developing more environmentally friendly refrigerants (the fluids that make cooling possible). Major acquisitions, such as Goodman Global in the U.S. in 2012, transformed it into the world's largest air conditioning manufacturer.
What it actually does
Daikin is primarily known for making products that control the temperature and quality of the air in buildings. This includes a wide range of heating, ventilation, and air conditioning (HVAC) systems for homes, offices, and large industrial spaces. You might recognize their brand on a ductless mini-split air conditioner, a smart thermostat on a wall, or a large cooling unit on the roof of a commercial building. Beyond just cooling and heating, the company also produces air purifiers and provides services to maintain this equipment.
Air Conditioning and Refrigeration Equipment
This is Daikin's largest and most important business, making up about 90% of its total sales (revenue). It designs, builds, and sells a huge variety of climate-control systems, from single-room air conditioners to massive systems for skyscrapers and factories. Customers range from individual homeowners to large construction companies and businesses. This segment also includes refrigeration units used in places like supermarkets and shipping containers to keep things cold.
Chemicals
This is a smaller but highly profitable part of Daikin's business. Leveraging its long history with refrigerants, the company develops and sells specialty chemicals called fluorochemicals. These materials are used in many everyday products, not just air conditioners; for example, they can be found in non-stick coatings for cookware, water-repellent fabrics for clothing, and components for smartphones. The customers for this segment are other manufacturing companies that use these advanced materials in their own products.
Other
This smaller segment groups together several other business lines. It includes oil hydraulics, which are systems that use pressurized fluid to power machinery in factories. It also contains defense systems, parts for aircraft, and even some medical equipment. While this part of the company is not a major driver of sales compared to air conditioning, it showcases Daikin's diverse engineering capabilities.
What management is betting on now
Daikin's current strategy, called "FUSION30," focuses heavily on environmental sustainability and growth in new markets. The company is investing heavily in energy-efficient products like heat pumps, which can both heat and cool, to meet growing demand for solutions that reduce carbon emissions. Management is also targeting significant growth in North America and emerging markets like India. Another key priority is expanding its "solutions" business, which involves providing not just equipment but also services and controls for entire buildings to optimize air quality and energy use.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $17.56 vs current price $13.00
Wall Street consensus is the average analyst price target: $14.65 (-16.6% lower than our fair-value estimate).
Our most-likely fair value is $17.56 a share — about 35.0% above today's price of $13.00, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $1.8B. Interest coverage 10.6x.
Net debt
$1.78B
Interest coverage
10.65x
Daikin Industries,Ltd.'s profit covers its interest bill about 10.6 times over.
Healthy
Worse cushion
Baseline
Better cushion
DKILY
BASELINE
Daikin Industries,Ltd.
Total debt $7.63B Interest coverage 10.65x This is the baseline the peer rows are being compared against.
Total debt $12.39B Interest coverage 4.16x -61% vs DKILY Carries about 2.6x less debt cushion than DKILY.
Total debt $4.62B Interest coverage 17.50x +64% vs DKILY Carries about 1.6x more debt cushion than DKILY.
Total debt $9.48B Interest coverage 12.46x +17% vs DKILY Carries about 1.2x more debt cushion than DKILY.
Total debt $2.02B Interest coverage 22.70x +113% vs DKILY Carries about 2.1x more debt cushion than DKILY.
Total debt $3.34B Interest coverage 22.02x +107% vs DKILY Carries about 2.1x more debt cushion than DKILY.
What you should know
The case for and against DKILY
3 Rewards
3 Risks
Rewards
-
Revenue grew 5.5% last year.
-
Returns 9.6% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Stock trades 11400.3% above its 5-year average P/E.
-
Operating margin compressed from 9.5% to 9.2% over 3 years.
-
Insider ownership is only 0.0% (peer median: 0.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.97x
Forward P/E
—
P/B
1.91x
P/S
0.01x
EV/EBITDA
0.54x
PEG ratio
2.79x
Profitability
How much profit each dollar creates
Gross margin
34.3%
Operating margin
9.2%
Net margin
5.2%
ROE
9.6%
ROA
4.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.39x
Current ratio
1.62x
Quick ratio
0.95x
Total debt
$7.63B
Total cash
$5.85B
Growth
How the business has been compounding
Revenue TTM
$33.06B
Revenue 5Y CAGR
8.0%
EPS TTM
0.62
EPS 5Y CAGR
8.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.95B
Free CF TTM
$1.62B
FCF margin
4.9%
Dividend
Shareholder payout
Yield
1.6%
Payout ratio
34.6%
Last ex-div date
2026-03-31