Sumitomo Electric Industries, Ltd. Just Beat EPS By 27%: Here's What Analysts Think Will Happen Next

Shareholders of Sumitomo Electric Industries, Ltd. (TSE:5802) will be pleased this week, given that the stock price is up 11% to JP¥2,579 following its latest half-yearly results. It looks like a credible result overall - although revenues of JP¥2.2t were what the analysts expected, Sumitomo Electric Industries surprised by delivering a (statutory) profit of JP¥56.41 per share, an impressive 27% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Sumitomo Electric Industries

Taking into account the latest results, Sumitomo Electric Industries' eight analysts currently expect revenues in 2025 to be JP¥4.59t, approximately in line with the last 12 months. Statutory earnings per share are expected to tumble 21% to JP¥201 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥4.62t and earnings per share (EPS) of JP¥206 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥2,834, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Sumitomo Electric Industries analyst has a price target of JP¥3,200 per share, while the most pessimistic values it at JP¥2,470. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Sumitomo Electric Industries' revenue growth is expected to slow, with the forecast 0.4% annualised growth rate until the end of 2025 being well below the historical 10.0% 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 3.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Sumitomo Electric Industries is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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.

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. At Simply Wall St, we have a full range of analyst estimates for Sumitomo Electric Industries going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Sumitomo Electric Industries , and understanding this should be part of your investment process.

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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.