Earnings Beat: Kawasaki Heavy Industries, Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a pretty great week for Kawasaki Heavy Industries, Ltd. (TSE:7012) shareholders, with its shares surging 20% to JP¥5,821 in the week since its latest full-year results. Revenues were JP¥1.8t, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at JP¥152, an impressive 69% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kawasaki Heavy Industries after the latest results.

View our latest analysis for Kawasaki Heavy Industries

Following the latest results, Kawasaki Heavy Industries' eleven analysts are now forecasting revenues of JP¥2.04t in 2025. This would be a meaningful 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 178% to JP¥421. Before this earnings report, the analysts had been forecasting revenues of JP¥1.99t and earnings per share (EPS) of JP¥387 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Despite these upgrades,the analysts have not made any major changes to their price target of JP¥5,136, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Kawasaki Heavy Industries, with the most bullish analyst valuing it at JP¥6,700 and the most bearish at JP¥3,600 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kawasaki Heavy Industries' past performance and to peers in the same industry. It's clear from the latest estimates that Kawasaki Heavy Industries' rate of growth is expected to accelerate meaningfully, with the forecast 10% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 2.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kawasaki Heavy Industries is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Kawasaki Heavy Industries' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Kawasaki Heavy Industries. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Kawasaki Heavy Industries analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Kawasaki Heavy Industries (1 doesn't sit too well with us!) that you need to take into consideration.

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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.