Earnings Miss: DENSO Corporation Missed EPS By 42% And Analysts Are Revising Their Forecasts

DENSO Corporation (TSE:6902) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to JP¥2,126 in the week after its latest half-year results. Revenue of JP¥3.6t surpassed estimates by 4.1%, although statutory earnings per share missed badly, coming in 42% below expectations at JP¥19.20 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following last week's earnings report, DENSO's 16 analysts are forecasting 2026 revenues to be JP¥7.18t, approximately in line with the last 12 months. Statutory earnings per share are predicted to shoot up 28% to JP¥171. Before this earnings report, the analysts had been forecasting revenues of JP¥7.17t and earnings per share (EPS) of JP¥177 in 2026. 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 minor downgrade to their earnings per share forecasts.

View our latest analysis for DENSO

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥2,463, 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. Currently, the most bullish analyst values DENSO at JP¥2,800 per share, while the most bearish prices it at JP¥2,200. This is a very narrow spread of estimates, implying either that DENSO is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.5% by the end of 2026. This indicates a significant reduction from annual growth of 9.1% 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 2.8% 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for DENSO. 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. The consensus price target held steady at JP¥2,463, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for DENSO going out to 2028, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for DENSO that we have uncovered.

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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.