Earnings Miss: Subaru Corporation Missed EPS By 12% And Analysts Are Revising Their Forecasts

Shareholders might have noticed that Subaru Corporation (TSE:7270) filed its interim result this time last week. The early response was not positive, with shares down 10.0% to JP¥2,462 in the past week. It was not a great result overall. While revenues of JP¥2.3t were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 12% to hit JP¥219 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Subaru after the latest results.

See our latest analysis for Subaru

Following last week's earnings report, Subaru's 15 analysts are forecasting 2025 revenues to be JP¥4.79t, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 19% to JP¥442 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥4.80t and earnings per share (EPS) of JP¥459 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at JP¥3,021, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Subaru at JP¥4,400 per share, while the most bearish prices it at JP¥1,900. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that Subaru's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2025 being well below the historical 10% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Subaru.

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 Subaru's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥3,021, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Subaru going out to 2027, and you can see them free on our platform here.

Even so, be aware that Subaru is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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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.