DENSO Corporation Just Missed Earnings - But Analysts Have Updated Their Models
As you might know, DENSO Corporation (TSE:6902) recently reported its half-year numbers. It looks like a pretty bad result, all things considered. Although revenues of JP¥3.8t were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 28% to hit JP¥20.85 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on DENSO after the latest results.
Taking into account the latest results, DENSO's 17 analysts currently expect revenues in 2027 to be JP¥7.79t, approximately in line with the last 12 months. Statutory earnings per share are expected to dip 8.5% to JP¥158 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥7.79t and earnings per share (EPS) of JP¥156 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
View our latest analysis for DENSO
It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥2,084. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic DENSO analyst has a price target of JP¥2,700 per share, while the most pessimistic values it at JP¥1,670. 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 DENSO shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DENSO's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 0.1% annualised decline to the end of 2027. That is a notable change from historical growth of 7.0% 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 4.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - DENSO is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that DENSO's 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.
With that in mind, we wouldn't be too quick to come to a conclusion on DENSO. Long-term earnings power is much more important than next year's profits. We have forecasts for DENSO going out to 2029, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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