Revenue Beat: AGC Inc. Exceeded Revenue Forecasts By 10% And Analysts Are Updating Their Estimates

Shareholders might have noticed that AGC Inc. (TSE:5201) filed its quarterly result this time last week. The early response was not positive, with shares down 4.5% to JP¥5,514 in the past week. AGC beat revenue forecasts by a solid 10% to hit JP¥499b. Statutory earnings per share came in at JP¥305, in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for AGC

After the latest results, the eight analysts covering AGC are now predicting revenues of JP¥2.07t in 2024. If met, this would reflect a modest 2.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 181% to JP¥302. In the lead-up to this report, the analysts had been modelling revenues of JP¥2.08t and earnings per share (EPS) of JP¥301 in 2024. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥5,923. 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 AGC, with the most bullish analyst valuing it at JP¥6,500 and the most bearish at JP¥5,200 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting AGC is an easy business to forecast or the the analysts are all using similar assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that AGC's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 8.5% 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 3.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that AGC is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at JP¥5,923, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for AGC going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for AGC (1 is a bit concerning!) that you should be aware 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.