Sumitomo Corporation Just Missed Earnings - But Analysts Have Updated Their Models

There's been a notable change in appetite for Sumitomo Corporation (TSE:8053) shares in the week since its quarterly report, with the stock down 11% to JP¥3,355. It was not a great result overall. While revenues of JP¥1.8t were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 19% to hit JP¥104 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Sumitomo

Taking into account the latest results, Sumitomo's nine analysts currently expect revenues in 2025 to be JP¥7.11t, approximately in line with the last 12 months. Per-share earnings are expected to surge 39% to JP¥441. Before this earnings report, the analysts had been forecasting revenues of JP¥7.27t and earnings per share (EPS) of JP¥442 in 2025. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of JP¥4,439, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Sumitomo's market value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Sumitomo analyst has a price target of JP¥5,200 per share, while the most pessimistic values it at JP¥4,000. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Sumitomo's revenue growth is expected to slow, with the forecast 2.0% annualised growth rate until the end of 2025 being well below the historical 7.8% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.5% per year. Even after the forecast slowdown in growth, it seems obvious that Sumitomo is also expected to grow faster 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at JP¥4,439, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Sumitomo 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 Sumitomo (1 is a bit concerning!) that you need to take into consideration.

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.

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