Sumitomo Electric Industries, Ltd. Just Beat Revenue Estimates By 6.6%

As you might know, Sumitomo Electric Industries, Ltd. (TSE:5802) just kicked off its latest quarterly results with some very strong numbers. The company beat expectations with revenues of JP¥1.1t arriving 6.6% ahead of forecasts. Statutory earnings per share (EPS) were JP¥45.03, 2.9% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the current consensus, from the nine analysts covering Sumitomo Electric Industries, is for revenues of JP¥4.60t in 2026. This implies a small 2.4% reduction in Sumitomo Electric Industries' revenue over the past 12 months. Statutory earnings per share are predicted to rise 2.8% to JP¥260. Before this earnings report, the analysts had been forecasting revenues of JP¥4.59t and earnings per share (EPS) of JP¥252 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Sumitomo Electric Industries

The consensus price target was unchanged at JP¥3,689, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sumitomo Electric Industries, with the most bullish analyst valuing it at JP¥4,600 and the most bearish at JP¥3,000 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.2% by the end of 2026. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sumitomo Electric Industries is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sumitomo Electric Industries' earnings potential next year. 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. The consensus price target held steady at JP¥3,689, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Sumitomo Electric Industries. Long-term earnings power is much more important than next year's profits. We have forecasts for Sumitomo Electric Industries going out to 2028, 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 it 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.