Kawasaki Heavy Industries, Ltd. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

It's been a pretty great week for Kawasaki Heavy Industries, Ltd. (TSE:7012) shareholders, with its shares surging 16% to JP¥6,669 in the week since its latest half-yearly results. It was a pretty negative result overall, with revenues of JP¥884b missing analyst predictions by 5.4%. Worse, the business reported a statutory loss of JP¥10.20 per share, a substantial decline on analyst expectations of a profit. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Kawasaki Heavy Industries

Taking into account the latest results, the consensus forecast from Kawasaki Heavy Industries' 13 analysts is for revenues of JP¥2.17t in 2025. This reflects a notable 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 27% to JP¥473. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥2.22t and earnings per share (EPS) of JP¥487 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at JP¥6,525, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Kawasaki Heavy Industries, with the most bullish analyst valuing it at JP¥8,400 and the most bearish at JP¥5,000 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's clear from the latest estimates that Kawasaki Heavy Industries' rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.8% 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 4.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kawasaki Heavy Industries 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Kawasaki Heavy Industries going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Kawasaki Heavy Industries (at least 2 which are significant) , and understanding them should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.