This Broker Just Slashed Their Kitagawa Seiki Co.,Ltd. (TSE:6327) Earnings Forecasts

Market forces rained on the parade of Kitagawa Seiki Co.,Ltd. (TSE:6327) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Kitagawa SeikiLtd from its solitary analyst is for revenues of JP¥6.5b in 2025 which, if met, would be a decent 9.6% increase on its sales over the past 12 months. Statutory earnings per share are supposed to drop 13% to JP¥67.80 in the same period. Prior to this update, the analyst had been forecasting revenues of JP¥8.0b and earnings per share (EPS) of JP¥115 in 2025. Indeed, we can see that the analyst is a lot more bearish about Kitagawa SeikiLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Kitagawa SeikiLtd

The consensus price target fell 30% to JP¥1,400, 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. It's clear from the latest estimates that Kitagawa SeikiLtd's rate of growth is expected to accelerate meaningfully, with the forecast 9.6% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 7.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Kitagawa SeikiLtd to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Kitagawa SeikiLtd.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.