TKP Corporation (TSE:3479) Just Released Its Third-Quarter Results And Analysts Are Updating Their Estimates

It's been a good week for TKP Corporation (TSE:3479) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.0% to JP¥1,983. TKP reported in line with analyst predictions, delivering revenues of JP¥27b and statutory earnings per share of JP¥90.73, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TKP after the latest results.

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Taking into account the latest results, the current consensus from TKP's four analysts is for revenues of JP¥121.4b in 2027. This would reflect a substantial 26% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 43% to JP¥134. Before this earnings report, the analysts had been forecasting revenues of JP¥117.6b and earnings per share (EPS) of JP¥131 in 2027. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Check out our latest analysis for TKP

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of JP¥1,925, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on TKP, with the most bullish analyst valuing it at JP¥2,000 and the most bearish at JP¥1,850 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting TKP is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that TKP's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TKP is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around TKP's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at JP¥1,925, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple TKP analysts - going out to 2028, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with TKP (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.