Rengo Co., Ltd. Just Missed Revenue By 13%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Rengo Co., Ltd. (TSE:3941) filed its third-quarter result this time last week. The early response was not positive, with shares down 7.9% to JP¥809 in the past week. Revenues were JP¥246b, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of JP¥133 being in line with what the analysts anticipated. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Rengo

Taking into account the latest results, the consensus forecast from Rengo's six analysts is for revenues of JP¥1.04t in 2026. This reflects a decent 9.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 36% to JP¥145. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.04t and earnings per share (EPS) of JP¥150 in 2026. 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.

The consensus price target held steady at JP¥1,165, 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. Currently, the most bullish analyst values Rengo at JP¥1,370 per share, while the most bearish prices it at JP¥960. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. We can infer from the latest estimates that forecasts expect a continuation of Rengo'shistorical trends, as the 7.6% annualised revenue growth to the end of 2026 is roughly in line with the 8.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.4% per year. So it's pretty clear that Rengo is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Rengo. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at JP¥1,165, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Rengo going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Rengo , and understanding these should be part of your investment process.

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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.