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Results: IHI Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts
The half-yearly results for IHI Corporation (TSE:7013) were released last week, making it a good time to revisit its performance. Revenues JP¥779b disappointed slightly, at9.3% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of JP¥29.69 coming in 14% above what was anticipated. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from IHI's eleven analysts is for revenues of JP¥1.88t in 2027. This reflects a solid 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 2.1% to JP¥183. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.86t and earnings per share (EPS) of JP¥177 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
Check out our latest analysis for IHI
There's been no major changes to the consensus price target of JP¥3,501, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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. The most optimistic IHI analyst has a price target of JP¥4,000 per share, while the most pessimistic values it at JP¥2,800. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await IHI shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that IHI'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 8.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect IHI to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IHI following these results. 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¥3,501, 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. At Simply Wall St, we have a full range of analyst estimates for IHI going out to 2029, and you can see them free on our platform here..
You still need to take note of risks, for example - IHI has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.
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