News Flash: 2 Analysts Think Tess Holdings Co.,Ltd. (TSE:5074) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for Tess Holdings Co.,Ltd. (TSE:5074), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Tess HoldingsLtd from its two analysts is for revenues of JP¥36b in 2025 which, if met, would be a credible 7.5% increase on its sales over the past 12 months. Statutory earnings per share are supposed to decline 12% to JP¥11.40 in the same period. Before this latest update, the analysts had been forecasting revenues of JP¥42b and earnings per share (EPS) of JP¥65.70 in 2025. Indeed, we can see that the analysts are a lot more bearish about Tess HoldingsLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Tess HoldingsLtd

The consensus price target fell 33% to JP¥340, with the weaker earnings outlook clearly leading analyst valuation estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Tess HoldingsLtd is forecast to grow faster in the future than it has in the past, with revenues expected to display 16% annualised growth until the end of 2025. If achieved, this would be a much better result than the 3.1% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.4% annually. Not only are Tess HoldingsLtd's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

That said, the analysts might have good reason to be negative on Tess HoldingsLtd, given its declining profit margins. For more information, you can click here to discover this and the 2 other concerns we've identified.

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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.