Kuraray Co., Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a sad week for Kuraray Co., Ltd. (TSE:3405), who've watched their investment drop 12% to JP¥1,932 in the week since the company reported its yearly result. It looks like a pretty bad result, all things considered. Although revenues of JP¥827b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 43% to hit JP¥96.33 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Kuraray

Taking into account the latest results, the current consensus from Kuraray's nine analysts is for revenues of JP¥869.3b in 2025. This would reflect a credible 5.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 92% to JP¥188. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥863.5b and earnings per share (EPS) of JP¥192 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥2,448, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Kuraray analyst has a price target of JP¥3,000 per share, while the most pessimistic values it at JP¥1,940. 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.

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. It's pretty clear that there is an expectation that Kuraray's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.1% growth on an annualised basis. This is compared to a historical growth rate of 9.7% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.0% annually. Factoring in the forecast slowdown in growth, it looks like Kuraray is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kuraray. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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. We have forecasts for Kuraray going out to 2027, and you can see them free on our platform here.

Even so, be aware that Kuraray is showing 3 warning signs in our investment analysis , you should know about...

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.