Shimano Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shimano Inc. (TSE:7309) just released its half-year report and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 14% higher than the analysts had forecast, at JP¥217b, while EPS were JP¥224 beating analyst models by 224%. 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.

View our latest analysis for Shimano

Taking into account the latest results, the most recent consensus for Shimano from eleven analysts is for revenues of JP¥462.6b in 2024. If met, it would imply a decent 8.1% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 41% to JP¥859. Before this earnings report, the analysts had been forecasting revenues of JP¥446.1b and earnings per share (EPS) of JP¥770 in 2024. So it seems there's been a definite increase in optimism about Shimano's future following the latest results, with a nice gain to the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of JP¥23,888, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shimano, with the most bullish analyst valuing it at JP¥30,890 and the most bearish at JP¥19,500 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shimano's past performance and to peers in the same industry. It's clear from the latest estimates that Shimano's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.0% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shimano is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Shimano following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at JP¥23,888, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Shimano. Long-term earnings power is much more important than next year's profits. We have forecasts for Shimano going out to 2026, 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 2 warning signs for Shimano that you need to be mindful of.

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