Revenue Miss: Koito Manufacturing Co., Ltd. Fell 7.4% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Last week saw the newest half-year earnings release from Koito Manufacturing Co., Ltd. (TSE:7276), an important milestone in the company's journey to build a stronger business. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥444b, statutory earnings were in line with expectations, at JP¥131 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Koito Manufacturing

Following last week's earnings report, Koito Manufacturing's twelve analysts are forecasting 2025 revenues to be JP¥935.6b, approximately in line with the last 12 months. Per-share earnings are expected to surge 31% to JP¥118. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥951.6b and earnings per share (EPS) of JP¥129 in 2025. 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.

The consensus price target held steady at JP¥2,133, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Koito Manufacturing analyst has a price target of JP¥2,800 per share, while the most pessimistic values it at JP¥1,700. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Koito Manufacturing's past performance and to peers in the same industry. We would highlight that Koito Manufacturing's revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2025 being well below the historical 5.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Koito Manufacturing.

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 Koito Manufacturing'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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Koito Manufacturing going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Koito Manufacturing that you need to be mindful 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.