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The Japan Steel Works, Ltd. Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected
The analysts might have been a bit too bullish on The Japan Steel Works, Ltd. (TSE:5631), given that the company fell short of expectations when it released its half-yearly results last week. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of JP¥125b missed by 16%, and statutory earnings per share of JP¥61.41 fell short of forecasts by 7.7%. 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.
After the latest results, the six analysts covering Japan Steel Works are now predicting revenues of JP¥316.3b in 2027. If met, this would reflect a decent 20% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 13% to JP¥300. Before this earnings report, the analysts had been forecasting revenues of JP¥310.6b and earnings per share (EPS) of JP¥289 in 2027. So the consensus seems to have become somewhat more optimistic on Japan Steel Works' earnings potential following these results.
Check out our latest analysis for Japan Steel Works
The average the analysts price target fell 7.3% to JP¥10,342, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them. 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. There are some variant perceptions on Japan Steel Works, with the most bullish analyst valuing it at JP¥12,450 and the most bearish at JP¥8,800 per share. 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 Japan Steel Works 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 Japan Steel Works' rate of growth is expected to accelerate meaningfully, with the forecast 43% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 5.7% 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. Factoring in the forecast acceleration in revenue, it's pretty clear that Japan Steel Works 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 Japan Steel Works' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Japan Steel Works. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Japan Steel Works 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 Japan Steel Works (of which 1 can't be ignored!) you should know about.
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