Earnings Miss: Sumitomo Corporation Missed EPS By 7.8% And Analysts Are Revising Their Forecasts

Sumitomo Corporation (TSE:8053) missed earnings with its latest half-yearly results, disappointing overly-optimistic forecasters. Sumitomo missed analyst forecasts, with revenues of JP¥1.7t and statutory earnings per share (EPS) of JP¥106, falling short by 4.2% and 7.8% respectively. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Sumitomo

Following the recent earnings report, the consensus from nine analysts covering Sumitomo is for revenues of JP¥6.87t in 2025. This implies a noticeable 3.0% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 47% to JP¥432. In the lead-up to this report, the analysts had been modelling revenues of JP¥7.00t and earnings per share (EPS) of JP¥435 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of JP¥4,080, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Sumitomo at JP¥5,200 per share, while the most bearish prices it at JP¥3,490. 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. We would highlight that revenue is expected to reverse, with a forecast 5.9% annualised decline to the end of 2025. That is a notable change from historical growth of 8.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.6% annually for the foreseeable future. It's pretty clear that Sumitomo's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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.

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

Even so, be aware that Sumitomo is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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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.