Earnings Report: Takasago Thermal Engineering Co., Ltd. Missed Revenue Estimates By 9.7%

Last week, you might have seen that Takasago Thermal Engineering Co., Ltd. (TSE:1969) released its quarterly result to the market. The early response was not positive, with shares down 2.5% to JP¥5,100 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥70b, statutory earnings were in line with expectations, at JP¥296 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Takasago Thermal Engineering

Taking into account the latest results, the current consensus from Takasago Thermal Engineering's six analysts is for revenues of JP¥371.5b in 2025. This would reflect a credible 4.5% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 7.5% to JP¥319. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥372.5b and earnings per share (EPS) of JP¥269 in 2025. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at JP¥5,975, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Takasago Thermal Engineering analyst has a price target of JP¥8,200 per share, while the most pessimistic values it at JP¥3,050. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Takasago Thermal Engineering's rate of growth is expected to accelerate meaningfully, with the forecast 6.0% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Takasago Thermal Engineering to grow faster than 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 Takasago Thermal Engineering following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 Takasago Thermal Engineering 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 1 warning sign for Takasago Thermal Engineering 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.