Earnings Beat: Rinnai Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a sad week for Rinnai Corporation (TSE:5947), who've watched their investment drop 11% to JP¥3,041 in the week since the company reported its quarterly result. It looks like a credible result overall - although revenues of JP¥98b were what the analysts expected, Rinnai surprised by delivering a (statutory) profit of JP¥47.71 per share, an impressive 42% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Rinnai

Taking into account the latest results, the most recent consensus for Rinnai from eight analysts is for revenues of JP¥460.6b in 2025. If met, it would imply a credible 5.0% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to reduce 4.6% to JP¥203 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥459.6b and earnings per share (EPS) of JP¥202 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¥4,139, showing that the business is executing well and in line with expectations. 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 Rinnai analyst has a price target of JP¥4,750 per share, while the most pessimistic values it at JP¥3,100. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Rinnai shareholders.

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 period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 6.8% growth on an annualised basis. That is in line with its 6.0% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.9% per year. So it's pretty clear that Rinnai is forecast to grow substantially faster than its 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. 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.

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 Rinnai analysts - going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Rinnai , and understanding it should be part of your investment process.

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.