Sumitomo Electric Industries, Ltd. Just Beat Revenue Estimates By 9.5%
Sumitomo Electric Industries, Ltd. (TSE:5802) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall were respectable, with statutory earnings of JP¥21.29 per share roughly in line with what the analysts had forecast. Revenues of JP¥1.3t came in 9.5% ahead of analyst predictions. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, Sumitomo Electric Industries' ten analysts are forecasting 2027 revenues to be JP¥5.38t, approximately in line with the last 12 months. Statutory earnings per share are forecast to descend 13% to JP¥111 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥5.30t and earnings per share (EPS) of JP¥110 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
See our latest analysis for Sumitomo Electric Industries
The analysts reconfirmed their price target of JP¥3,647, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Sumitomo Electric Industries at JP¥5,100 per share, while the most bearish prices it at JP¥2,600. 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.
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 pretty clear that there is an expectation that Sumitomo Electric Industries' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 2.1% growth on an annualised basis. This is compared to a historical growth rate of 9.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sumitomo Electric Industries.
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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Sumitomo Electric Industries' revenue is expected to perform worse 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.
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. We have estimates - from multiple Sumitomo Electric Industries analysts - going out to 2029, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Sumitomo Electric Industries that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.