Earnings Miss: M3, Inc. Missed EPS By 36% And Analysts Are Revising Their Forecasts

M3, Inc. (TSE:2413) just released its latest interim report and things are not looking great. Results showed a clear earnings miss, with JP¥61b revenue coming in 5.5% lower than what the analystsexpected. Statutory earnings per share (EPS) of JP¥8.91 missed the mark badly, arriving some 36% below what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for M3

Following the latest results, M3's 13 analysts are now forecasting revenues of JP¥270.1b in 2025. This would be a decent 9.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 16% to JP¥67.07. Before this earnings report, the analysts had been forecasting revenues of JP¥269.0b and earnings per share (EPS) of JP¥69.05 in 2025. 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¥1,861, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic M3 analyst has a price target of JP¥3,300 per share, while the most pessimistic values it at JP¥1,120. 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.

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. The analysts are definitely expecting M3's growth to accelerate, with the forecast 19% annualised growth to the end of 2025 ranking favourably alongside historical growth of 14% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect M3 to grow faster than the wider industry.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for M3 going out to 2027, and you can see them free on our platform here..

You still need to take note of risks, for example - M3 has 1 warning sign we think you should be aware of.

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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.