Earnings Miss: SMS Co., Ltd. Missed EPS By 46% And Analysts Are Revising Their Forecasts

It's been a mediocre week for SMS Co., Ltd. (TSE:2175) shareholders, with the stock dropping 15% to JP¥1,726 in the week since its latest interim results. Statutory earnings per share fell badly short of expectations, coming in at JP¥6.13, some 46% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥32b. 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.

Check out our latest analysis for SMS

Taking into account the latest results, the most recent consensus for SMS from seven analysts is for revenues of JP¥64.9b in 2025. If met, it would imply a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 21% to JP¥95.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥65.0b and earnings per share (EPS) of JP¥94.57 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.

There were no changes to revenue or earnings estimates or the price target of JP¥3,433, suggesting that the company has met expectations in its recent result. 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 SMS, with the most bullish analyst valuing it at JP¥4,900 and the most bearish at JP¥2,700 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. It's clear from the latest estimates that SMS' rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect SMS to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for SMS going out to 2027, and you can see them free on our platform here..

We also provide an overview of the SMS Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.