Earnings Beat: Meiji Holdings Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that Meiji Holdings Co., Ltd. (TSE:2269) released its half-yearly result to the market. The early response was not positive, with shares down 5.5% to JP¥3,311 in the past week. The result was positive overall - although revenues of JP¥569b were in line with what the analysts predicted, Meiji Holdings surprised by delivering a statutory profit of JP¥47.43 per share, modestly greater than expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Meiji Holdings

Taking into account the latest results, the most recent consensus for Meiji Holdings from eight analysts is for revenues of JP¥1.15t in 2025. If met, it would imply a credible 2.1% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 5.9% to JP¥194. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.15t and earnings per share (EPS) of JP¥188 in 2025. So the consensus seems to have become somewhat more optimistic on Meiji Holdings' earnings potential following these results.

The consensus price target was unchanged at JP¥3,625, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Meiji Holdings at JP¥4,400 per share, while the most bearish prices it at JP¥3,100. 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.

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. For example, we noticed that Meiji Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.3% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 3.3% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.7% annually. So while Meiji Holdings' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Meiji Holdings' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at JP¥3,625, 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 Meiji Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Meiji Holdings going out to 2027, and you can see them free on our platform here..

We also provide an overview of the Meiji Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.