SMS Co., Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's shaping up to be a tough period for SMS Co., Ltd. (TSE:2175), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with JP¥13b revenue coming in 8.7% lower than what the analystsexpected. Statutory earnings per share (EPS) of JP¥2.19 missed the mark badly, arriving some 69% below what was expected. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for SMS

After the latest results, the seven analysts covering SMS are now predicting revenues of JP¥71.5b in 2026. If met, this would reflect a huge 20% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 21% to JP¥95.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥74.6b and earnings per share (EPS) of JP¥107 in 2026. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to JP¥2,800. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic SMS analyst has a price target of JP¥3,800 per share, while the most pessimistic values it at JP¥1,750. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. The analysts are definitely expecting SMS' growth to accelerate, with the forecast 16% annualised growth to the end of 2026 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.1% 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 the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded SMS' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of SMS' future valuation.

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 don't want to rain on the parade too much, but we did also find 1 warning sign for SMS that you need to be mindful of.

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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.