Hitachi, Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Hitachi, Ltd. (TSE:6501) shareholders are probably feeling a little disappointed, since its shares fell 2.5% to JP¥3,951 in the week after its latest half-yearly results. It looks like a pretty bad result, all things considered. Although revenues of JP¥4.5t were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 24% to hit JP¥25.42 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Hitachi

Following last week's earnings report, Hitachi's 15 analysts are forecasting 2025 revenues to be JP¥9.41t, approximately in line with the last 12 months. Statutory per-share earnings are expected to be JP¥145, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of JP¥9.43t and earnings per share (EPS) of JP¥145 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.

The analysts reconfirmed their price target of JP¥4,403, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Hitachi, with the most bullish analyst valuing it at JP¥5,400 and the most bearish at JP¥3,000 per share. 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 pretty clear that there is an expectation that Hitachi's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.1% growth on an annualised basis. This is compared to a historical growth rate of 3.5% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that Hitachi is also expected to grow slower than other industry participants.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hitachi's revenue is expected to perform worse 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.

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

Before you take the next step you should know about the 1 warning sign for Hitachi that we have uncovered.

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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.