Earnings Miss: Honda Motor Co., Ltd. Missed EPS By 14% And Analysts Are Revising Their Forecasts

It's been a good week for Honda Motor Co., Ltd. (TSE:7267) shareholders, because the company has just released its latest yearly results, and the shares gained 3.5% to JP¥1,468. It was not a great result overall. While revenues of JP¥22t were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit JP¥179 per share. 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. 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, Honda Motor's 17 analysts currently expect revenues in 2026 to be JP¥22t, approximately in line with the last 12 months. Statutory earnings per share are expected to decline 11% to JP¥176 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥22t and earnings per share (EPS) of JP¥191 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 small dip in their earnings per share forecasts.

See our latest analysis for Honda Motor

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥1,643, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Honda Motor analyst has a price target of JP¥1,900 per share, while the most pessimistic values it at JP¥1,250. 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.

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 0.3% by the end of 2026. This indicates a significant reduction from annual growth of 12% 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 - Honda Motor 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Honda Motor's revenue is expected to 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Honda Motor going out to 2028, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Honda Motor (1 is potentially serious) you should be aware of.

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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.