Sumitomo Forestry Co., Ltd. Just Missed EPS By 48%: Here's What Analysts Think Will Happen Next

Sumitomo Forestry Co., Ltd. (TSE:1911) came out with its half-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall were not great, with earnings of JP¥43.85 per share falling drastically short of analyst expectations. Meanwhile revenues hit JP¥1.3t and were slightly better than forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the most recent consensus for Sumitomo Forestry from six analysts is for revenues of JP¥2.79t in 2026. If met, it would imply a decent 13% increase on its revenue over the past 12 months. Statutory earnings per share are expected to reduce 2.7% to JP¥134 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥2.74t and earnings per share (EPS) of JP¥148 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

See our latest analysis for Sumitomo Forestry

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥1,662, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Sumitomo Forestry analyst has a price target of JP¥1,920 per share, while the most pessimistic values it at JP¥1,400. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Sumitomo Forestry's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 12% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sumitomo Forestry to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sumitomo Forestry. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at JP¥1,662, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sumitomo Forestry analysts - going out to 2028, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Sumitomo Forestry (including 1 which is a bit concerning) .

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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.