NGK Corporation (TSE:5333) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?
It's been a pretty great week for NGK Corporation (TSE:5333) shareholders, with its shares surging 16% to JP¥5,121 in the week since its latest yearly results. It was a workmanlike result, with revenues of JP¥670b coming in 2.1% ahead of expectations, and statutory earnings per share of JP¥206, in line with analyst appraisals. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, NGK's six analysts are forecasting 2027 revenues to be JP¥682.8b, approximately in line with the last 12 months. Per-share earnings are expected to leap 27% to JP¥271. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥674.1b and earnings per share (EPS) of JP¥269 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 NGK
There were no changes to revenue or earnings estimates or the price target of JP¥4,493, suggesting that the company has met expectations in its recent result. 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. There are some variant perceptions on NGK, with the most bullish analyst valuing it at JP¥4,900 and the most bearish at JP¥3,740 per share. This is a very narrow spread of estimates, implying either that NGK is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 NGK's revenue growth is expected to slow, with the forecast 1.9% annualised growth rate until the end of 2027 being well below the historical 6.5% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that NGK is also expected to grow slower than other industry participants.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for NGK going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - NGK has 1 warning sign we think 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.