Obayashi Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Obayashi Corporation (TSE:1802) shareholders, because the company has just released its latest half-year results, and the shares gained 7.4% to JP¥2,806. Revenues were JP¥1.2t, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at JP¥85.25, an impressive 114% ahead of estimates. 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. 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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Following last week's earnings report, Obayashi's eight analysts are forecasting 2026 revenues to be JP¥2.58t, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 34% to JP¥160 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥2.60t and earnings per share (EPS) of JP¥160 in 2026. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

Check out our latest analysis for Obayashi

There were no changes to revenue or earnings estimates or the price target of JP¥2,804, suggesting that the company has met expectations in its recent result. 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 Obayashi analyst has a price target of JP¥3,200 per share, while the most pessimistic values it at JP¥2,400. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Obayashi is an easy business to forecast or the the analysts are all using similar assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Obayashi's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 1.5% growth on an annualised basis. This is compared to a historical growth rate of 8.3% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Obayashi is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Obayashi's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥2,804, 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 Obayashi. Long-term earnings power is much more important than next year's profits. We have forecasts for Obayashi going out to 2028, 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 3 warning signs for Obayashi (1 shouldn't be ignored!) 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.