Earnings Report: THK Co., Ltd. Missed Revenue Estimates By 7.1%

Shareholders will be ecstatic, with their stake up 25% over the past week following THK Co., Ltd.'s (TSE:6481) latest third-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥85b, statutory earnings were in line with expectations, at JP¥150 per share. 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. 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 THK

Taking into account the latest results, the current consensus from THK's 14 analysts is for revenues of JP¥388.7b in 2025. This would reflect a decent 11% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 75% to JP¥193. In the lead-up to this report, the analysts had been modelling revenues of JP¥391.9b and earnings per share (EPS) of JP¥198 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.4% to JP¥3,512, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 THK, with the most bullish analyst valuing it at JP¥5,000 and the most bearish at JP¥2,100 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We can infer from the latest estimates that forecasts expect a continuation of THK'shistorical trends, as the 9.0% annualised revenue growth to the end of 2025 is roughly in line with the 9.5% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.8% per year. So although THK is expected to maintain its revenue growth rate, it's definitely expected to grow faster than 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 estimates - from multiple THK analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for THK 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.