Results: Harmonic Drive Systems Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Harmonic Drive Systems Inc. (TSE:6324) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.0% to hit JP¥17b. Harmonic Drive Systems also reported a statutory profit of JP¥13.46, which was an impressive 27% above what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from Harmonic Drive Systems' nine analysts is for revenues of JP¥72.9b in 2027. This reflects a decent 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 107% to JP¥63.89. Before this earnings report, the analysts had been forecasting revenues of JP¥71.5b and earnings per share (EPS) of JP¥62.75 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for Harmonic Drive Systems

The analysts reconfirmed their price target of JP¥7,257, showing that the business is executing well and in line with expectations. 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 Harmonic Drive Systems, with the most bullish analyst valuing it at JP¥11,000 and the most bearish at JP¥3,300 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Harmonic Drive Systems' past performance and to peers in the same industry. The analysts are definitely expecting Harmonic Drive Systems' growth to accelerate, with the forecast 22% annualised growth to the end of 2027 ranking favourably alongside historical growth of 1.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Harmonic Drive Systems is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥7,257, 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 forecasts for Harmonic Drive Systems going out to 2029, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Harmonic Drive Systems that you should be aware of.

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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.