Revenue Miss: Eiken Chemical Co., Ltd. Fell 9.1% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

There's been a notable change in appetite for Eiken Chemical Co., Ltd. (TSE:4549) shares in the week since its first-quarter report, with the stock down 12% to JP¥2,099. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥9.5b, statutory earnings were in line with expectations, at JP¥71.69 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Eiken Chemical

Taking into account the latest results, the current consensus from Eiken Chemical's two analysts is for revenues of JP¥42.0b in 2025. This would reflect a satisfactory 5.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 68% to JP¥114. In the lead-up to this report, the analysts had been modelling revenues of JP¥42.4b and earnings per share (EPS) of JP¥125 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 6.1% to JP¥2,300, with the analysts clearly linking lower forecast earnings to the performance of the stock price.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Eiken Chemical's past performance and to peers in the same industry. The analysts are definitely expecting Eiken Chemical's growth to accelerate, with the forecast 7.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 3.2% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.6% per year. Eiken Chemical is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 analyst estimates for Eiken Chemical going out as far as 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Eiken Chemical 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com