Japan Tobacco Inc. (TSE:2914) Just Released Its Half-Year Earnings: Here's What Analysts Think

Shareholders might have noticed that Japan Tobacco Inc. (TSE:2914) filed its interim result this time last week. The early response was not positive, with shares down 6.0% to JP¥4,153 in the past week. It was a pretty mixed result, with revenues beating expectations to hit JP¥1.6t. Statutory earnings fell 2.6% short of analyst forecasts, reaching JP¥83.31 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.

Check out our latest analysis for Japan Tobacco

Taking into account the latest results, Japan Tobacco's ten analysts currently expect revenues in 2024 to be JP¥3.03t, approximately in line with the last 12 months. Statutory per share are forecast to be JP¥278, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥3.03t and earnings per share (EPS) of JP¥284 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at JP¥4,490, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Japan Tobacco, with the most bullish analyst valuing it at JP¥5,250 and the most bearish at JP¥3,600 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Japan Tobacco's revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2024 being well below the historical 7.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that Japan Tobacco is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider 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 Japan Tobacco analysts - going out to 2026, and you can see them free on our platform here.

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

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