Kao Corporation Just Beat EPS By 27%: Here's What Analysts Think Will Happen Next

As you might know, Kao Corporation (TSE:4452) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.3% to hit JP¥366b. Kao also reported a statutory profit of JP¥35.43, which was an impressive 27% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kao after the latest results.

View our latest analysis for Kao

Taking into account the latest results, the most recent consensus for Kao from ten analysts is for revenues of JP¥1.59t in 2024. If met, it would imply an okay 2.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 85% to JP¥221. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.58t and earnings per share (EPS) of JP¥221 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of JP¥6,607, suggesting that the company has met expectations in its recent result. 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 Kao at JP¥7,600 per share, while the most bearish prices it at JP¥5,500. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 clear from the latest estimates that Kao's rate of growth is expected to accelerate meaningfully, with the forecast 3.1% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.6% annually. Kao 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 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at JP¥6,607, 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 Kao. Long-term earnings power is much more important than next year's profits. We have forecasts for Kao going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Kao .

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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.