The Japan Steel Works, Ltd. Recorded A 12% Miss On Revenue: Analysts Are Revisiting Their Models

The Japan Steel Works, Ltd. (TSE:5631) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were JP¥64b, 12% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of JP¥194 being in line with what the analysts forecast. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Japan Steel Works

Taking into account the latest results, the consensus forecast from Japan Steel Works' six analysts is for revenues of JP¥300.4b in 2026. This reflects a decent 20% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 16% to JP¥278. Before this earnings report, the analysts had been forecasting revenues of JP¥303.6b and earnings per share (EPS) of JP¥278 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥6,983. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Japan Steel Works analyst has a price target of JP¥7,900 per share, while the most pessimistic values it at JP¥5,600. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's clear from the latest estimates that Japan Steel Works' rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 5.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Japan Steel Works to grow faster than the wider industry.

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. 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.

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 Japan Steel Works going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Japan Steel Works 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.