Results: Earth Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Earth Corporation (TSE:4985) last week reported its latest yearly 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 JP¥158b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at JP¥186, an impressive 31% ahead of estimates. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Earth

Taking into account the latest results, the current consensus from Earth's three analysts is for revenues of JP¥162.6b in 2024. This would reflect a satisfactory 2.7% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plunge 52% to JP¥89.25 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥161.7b and earnings per share (EPS) of JP¥94.00 in 2024. 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.

The average price target fell 8.9% to JP¥3,977, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Earth analyst has a price target of JP¥4,500 per share, while the most pessimistic values it at JP¥3,330. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Earth's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 2.7% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.0% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.1% annually for the foreseeable future. So although Earth's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Earth. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than 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.

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. We have forecasts for Earth 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 Earth .

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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.