Japan Tobacco Inc. (TSE:2914) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

Last week, you might have seen that Japan Tobacco Inc. (TSE:2914) released its third-quarter result to the market. The early response was not positive, with shares down 3.9% to JP¥7,247 in the past week. Revenues of JP¥1.0t were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at JP¥105, missing estimates by 2.5%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following the latest results, Japan Tobacco's 14 analysts are now forecasting revenues of JP¥4.08t in 2027. This would be a credible 6.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 21% to JP¥414. In the lead-up to this report, the analysts had been modelling revenues of JP¥4.06t and earnings per share (EPS) of JP¥410 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.

Check out our latest analysis for Japan Tobacco

The analysts reconfirmed their price target of JP¥7,757, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Japan Tobacco at JP¥8,700 per share, while the most bearish prices it at JP¥6,400. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Japan Tobacco's past performance and to peers in the same industry. We would highlight that Japan Tobacco's revenue growth is expected to slow, with the forecast 5.3% annualised growth rate until the end of 2027 being well below the historical 10% p.a. growth over the last five years. Compare this to the 24 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.7% per year. So it's pretty clear that, while Japan Tobacco's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Japan Tobacco going out to 2028, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Japan Tobacco that you need to be mindful of.

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