Earnings Miss: DENSO Corporation Missed EPS By 17% And Analysts Are Revising Their Forecasts

Shareholders might have noticed that DENSO Corporation (TSE:6902) filed its yearly result this time last week. The early response was not positive, with shares down 3.3% to JP¥2,692 in the past week. Revenues were in line with forecasts, at JP¥7.1t, although statutory earnings per share came in 17% below what the analysts expected, at JP¥105 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for DENSO

Taking into account the latest results, the consensus forecast from DENSO's 17 analysts is for revenues of JP¥7.42t in 2025. This reflects a modest 3.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 74% to JP¥187. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥7.57t and earnings per share (EPS) of JP¥191 in 2025. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of JP¥3,163, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on DENSO's market value. 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. There are some variant perceptions on DENSO, with the most bullish analyst valuing it at JP¥3,400 and the most bearish at JP¥2,650 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting DENSO is an easy business to forecast or the the analysts are all using similar assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that DENSO's revenue growth is expected to slow, with the forecast 3.8% annualised growth rate until the end of 2025 being well below the historical 7.3% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.8% annually. Factoring in the forecast slowdown in growth, it looks like DENSO is forecast to grow at about the same rate as the wider industry.

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. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. With that said, earnings are more important to the long-term value of the business. 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 DENSO going out to 2027, and you can see them free on our platform here..

It might also be worth considering whether DENSO's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.