Japan Tobacco Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Japan Tobacco Inc. (TSE:2914) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were in line with forecasts, at JP¥823b, although statutory earnings per share came in 12% below what the analysts expected, at JP¥77.29 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Japan Tobacco

Taking into account the latest results, the consensus forecast from Japan Tobacco's nine analysts is for revenues of JP¥3.19t in 2025. This reflects a satisfactory 3.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 9.8% to JP¥299. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥3.11t and earnings per share (EPS) of JP¥296 in 2025. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.

Even though revenue forecasts increased, there was no change to the consensus price target of JP¥4,622, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Japan Tobacco at JP¥5,450 per share, while the most bearish prices it at JP¥4,000. 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.

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 Japan Tobacco's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.9% growth on an annualised basis. This is compared to a historical growth rate of 8.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.3% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Japan Tobacco.

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. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at JP¥4,622, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Japan Tobacco going out to 2026, and you can see them free on our platform here.

Even so, be aware that Japan Tobacco is showing 1 warning sign in our investment analysis , you should know about...

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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.