Pacific Industrial Co., Ltd. Just Beat EPS By 25%: Here's What Analysts Think Will Happen Next

Pacific Industrial Co., Ltd. (TSE:7250) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.8% to hit JP¥207b. Pacific Industrial also reported a statutory profit of JP¥289, which was an impressive 25% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pacific Industrial after the latest results.

See our latest analysis for Pacific Industrial

Following the recent earnings report, the consensus from five analysts covering Pacific Industrial is for revenues of JP¥200.5b in 2025. This implies a noticeable 3.3% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 38% to JP¥178 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥207.6b and earnings per share (EPS) of JP¥187 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The analysts made no major changes to their price target of JP¥1,698, suggesting the downgrades are not expected to have a long-term impact on Pacific Industrial's 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. There are some variant perceptions on Pacific Industrial, with the most bullish analyst valuing it at JP¥2,100 and the most bearish at JP¥1,400 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Pacific Industrial shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.3% by the end of 2025. This indicates a significant reduction from annual growth of 6.4% 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 3.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Pacific Industrial is expected to lag the wider industry.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at JP¥1,698, 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 Pacific Industrial. Long-term earnings power is much more important than next year's profits. We have forecasts for Pacific Industrial going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Pacific Industrial (of which 1 is a bit concerning!) you should know about.

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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.