Tosho Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Tosho Co., Ltd. (TSE:8920) came out with its half-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of JP¥6.6b were what the analysts expected, Tosho surprised by delivering a (statutory) profit of JP¥21.79 per share, an impressive 44% above what was forecast. 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.

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After the latest results, the consensus from Tosho's three analysts is for revenues of JP¥27.7b in 2026, which would reflect a concerning 22% decline in revenue compared to the last year of performance. Per-share earnings are expected to shoot up 51% to JP¥62.89. Before this earnings report, the analysts had been forecasting revenues of JP¥27.6b and earnings per share (EPS) of JP¥61.30 in 2026. So the consensus seems to have become somewhat more optimistic on Tosho's earnings potential following these results.

View our latest analysis for Tosho

There's been no major changes to the consensus price target of JP¥1,390, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values Tosho at JP¥2,500 per share, while the most bearish prices it at JP¥820. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 40% by the end of 2026. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.2% per year. It's pretty clear that Tosho's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tosho's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tosho's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥1,390, 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 Tosho. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tosho analysts - going out to 2028, 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 Tosho , and understanding this should be part of your investment process.

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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.