Earnings Beat: IHI Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

IHI Corporation (TSE:7013) just released its first-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 6.1% to hit JP¥348b. IHI also reported a statutory profit of JP¥123, which was an impressive 21% above what the analysts had forecast. 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'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 IHI

Taking into account the latest results, the consensus forecast from IHI's nine analysts is for revenues of JP¥1.61t in 2025. This reflects a meaningful 17% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with IHI forecast to report a statutory profit of JP¥509 per share. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.59t and earnings per share (EPS) of JP¥495 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 5.8% to JP¥4,639, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. The most optimistic IHI analyst has a price target of JP¥6,100 per share, while the most pessimistic values it at JP¥2,950. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that IHI's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 24% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 4.9% per year. So it looks like IHI is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IHI 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for IHI 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 IHI 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.