THK Co., Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Last week, you might have seen that THK Co., Ltd. (TSE:6481) released its half-year result to the market. The early response was not positive, with shares down 4.4% to JP¥4,117 in the past week. Statutory earnings per share fell badly short of expectations, coming in at JP¥29.97, some 27% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥176b. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the current consensus from THK's 13 analysts is for revenues of JP¥357.6b in 2025. This would reflect an okay 2.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 128% to JP¥142. In the lead-up to this report, the analysts had been modelling revenues of JP¥356.8b and earnings per share (EPS) of JP¥141 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

See our latest analysis for THK

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥4,261. 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. There are some variant perceptions on THK, with the most bullish analyst valuing it at JP¥5,000 and the most bearish at JP¥2,800 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await THK shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the THK's past performance and to peers in the same industry. It's pretty clear that there is an expectation that THK's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.9% growth on an annualised basis. This is compared to a historical growth rate of 8.6% over the past five years. Compare this to the 256 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.7% per year. Factoring in the forecast slowdown in growth, it looks like THK is forecast to grow at about the same rate as 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 real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at JP¥4,261, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple THK analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - THK has 2 warning signs (and 1 which shouldn't be ignored) we think 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.