Results: Komatsu Ltd. Exceeded Expectations And The Consensus Has Updated Its Estimates

Komatsu Ltd. (TSE:6301) defied analyst predictions to release its half-yearly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 5.6% to hit JP¥1.0t. Komatsu reported statutory earnings per share (EPS) JP¥99.29, which was a notable 14% above what the analysts had 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.

View our latest analysis for Komatsu

Following last week's earnings report, Komatsu's twelve analysts are forecasting 2025 revenues to be JP¥3.94t, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 3.4% to JP¥408 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥3.93t and earnings per share (EPS) of JP¥419 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at JP¥4,595, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Komatsu, with the most bullish analyst valuing it at JP¥5,500 and the most bearish at JP¥3,200 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.3% by the end of 2025. This indicates a significant reduction from annual growth of 13% 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 4.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Komatsu is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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¥4,595, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Komatsu going out to 2027, and you can see them free on our platform here.

Even so, be aware that Komatsu is showing 1 warning sign in our investment analysis , 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.