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

Shareholders might have noticed that Zensho Holdings Co., Ltd. (TSE:7550) filed its yearly result this time last week. The early response was not positive, with shares down 7.1% to JP¥8,279 in the past week. It was not a great result overall. While revenues of JP¥1.1t were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 17% to hit JP¥240 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the consensus forecast from Zensho Holdings' three analysts is for revenues of JP¥1.22t in 2026. This reflects a credible 6.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 24% to JP¥298. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.21t and earnings per share (EPS) of JP¥355 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

See our latest analysis for Zensho Holdings

The consensus price target held steady at JP¥10,333, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Zensho Holdings, with the most bullish analyst valuing it at JP¥11,000 and the most bearish at JP¥10,000 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Zensho Holdings' revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 6.9% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this to the 162 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.5% per year. Factoring in the forecast slowdown in growth, it looks like Zensho Holdings is forecast to grow at about the same rate as 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 Zensho Holdings. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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 Zensho Holdings analysts - going out to 2028, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Zensho Holdings that you need to take into consideration.

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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.