Sumitomo Forestry Co., Ltd. Just Missed EPS By 30%: Here's What Analysts Think Will Happen Next

Explore Sumitomo Forestry's Fair Values from the Community and select yours

Shareholders might have noticed that Sumitomo Forestry Co., Ltd. (TSE:1911) filed its half-yearly result this time last week. The early response was not positive, with shares down 2.4% to JP¥1,530 in the past week. It looks like a pretty bad result, all things considered. Although revenues of JP¥1.1t were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 30% to hit JP¥79.13 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.

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After the latest results, the six analysts covering Sumitomo Forestry are now predicting revenues of JP¥2.37t in 2025. If met, this would reflect a notable 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 4.3% to JP¥170 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥2.39t and earnings per share (EPS) of JP¥185 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Check out our latest analysis for Sumitomo Forestry

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥1,853, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Sumitomo Forestry, with the most bullish analyst valuing it at JP¥2,140 and the most bearish at JP¥1,500 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 Sumitomo Forestry's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sumitomo Forestry to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sumitomo Forestry. 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 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Sumitomo Forestry going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Sumitomo Forestry (1 is concerning!) that we have uncovered.

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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.