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Taiyo Yuden Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models
There's been a major selloff in Taiyo Yuden Co., Ltd. (TSE:6976) shares in the week since it released its interim report, with the stock down 22% to JP¥6,674. Statutory earnings per share fell badly short of expectations, coming in at JP¥43.19, some 34% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥206b. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Taiyo Yuden's 16 analysts is for revenues of JP¥424.6b in 2027. This would reflect a solid 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 89% to JP¥247. Before this earnings report, the analysts had been forecasting revenues of JP¥417.5b and earnings per share (EPS) of JP¥230 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
See our latest analysis for Taiyo Yuden
The consensus price target was unchanged at JP¥14,819, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Taiyo Yuden analyst has a price target of JP¥26,000 per share, while the most pessimistic values it at JP¥8,400. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.
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 Taiyo Yuden's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 1.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Taiyo Yuden 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 Taiyo Yuden's earnings potential next year. 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. 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 Taiyo Yuden going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Taiyo Yuden (of which 1 is a bit concerning!) you should know about.
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