Shimizu Corporation Just Missed Earnings - But Analysts Have Updated Their Models

It's been a pretty great week for Shimizu Corporation (TSE:1803) shareholders, with its shares surging 16% to JP¥1,230 in the week since its latest half-yearly results. Results overall were not great, with earnings of JP¥11.79 per share falling drastically short of analyst expectations. Meanwhile revenues hit JP¥837b and were slightly better than forecasts. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Shimizu

Following the recent earnings report, the consensus from seven analysts covering Shimizu is for revenues of JP¥1.85t in 2025. This implies a measurable 2.8% decline in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 299% to JP¥66.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.84t and earnings per share (EPS) of JP¥62.91 in 2025. So the consensus seems to have become somewhat more optimistic on Shimizu's earnings potential following these results.

There's been no major changes to the consensus price target of JP¥961, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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 Shimizu, with the most bullish analyst valuing it at JP¥1,100 and the most bearish at JP¥800 per share. 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.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.6% by the end of 2025. This indicates a significant reduction from annual growth of 5.4% 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 1.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shimizu is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Shimizu 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 Shimizu'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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Shimizu 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 4 warning signs for Shimizu (of which 1 makes us a bit uncomfortable!) 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.