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Nippon Steel Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Nippon Steel Corporation (TSE:5401) just released its interim report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 2.7% to hit JP¥5.8t. Nippon Steel also reported a statutory profit of JP¥35.92, which was an impressive 126% 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Nippon Steel after the latest results.
Following last week's earnings report, Nippon Steel's eight analysts are forecasting 2027 revenues to be JP¥11t, approximately in line with the last 12 months. Statutory per-share earnings are expected to be JP¥75.49, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of JP¥11t and earnings per share (EPS) of JP¥55.37 in 2027. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
View our latest analysis for Nippon Steel
There's been no major changes to the consensus price target of JP¥753, 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. Currently, the most bullish analyst values Nippon Steel at JP¥970 per share, while the most bearish prices it at JP¥470. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that revenue is expected to reverse, with a forecast 2.6% annualised decline to the end of 2027. That is a notable change from historical growth of 9.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.1% annually for the foreseeable future. It's pretty clear that Nippon Steel's revenues are expected to perform substantially worse 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 Nippon Steel following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Nippon Steel's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥753, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Nippon Steel going out to 2029, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Nippon Steel (1 makes us a bit uncomfortable!) that you should be aware of.
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