Kansai Paint Co., Ltd. Just Missed EPS By 52%: Here's What Analysts Think Will Happen Next

It's been a sad week for Kansai Paint Co., Ltd. (TSE:4613), who've watched their investment drop 13% to JP¥2,094 in the week since the company reported its interim result. Statutory earnings per share fell badly short of expectations, coming in at JP¥21.23, some 52% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥294b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Kansai Paint

Taking into account the latest results, the most recent consensus for Kansai Paint from nine analysts is for revenues of JP¥594.0b in 2025. If met, it would imply a reasonable 2.0% increase on its revenue over the past 12 months. Statutory earnings per share are expected to dip 5.1% to JP¥186 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥596.9b and earnings per share (EPS) of JP¥190 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 minor downgrade to their earnings per share forecasts.

The consensus price target held steady at JP¥2,769, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Kansai Paint at JP¥3,300 per share, while the most bearish prices it at JP¥2,300. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that Kansai Paint's revenue growth is expected to slow, with the forecast 4.0% annualised growth rate until the end of 2025 being well below the historical 9.5% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kansai Paint.

The Bottom Line

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

With that in mind, we wouldn't be too quick to come to a conclusion on Kansai Paint. Long-term earnings power is much more important than next year's profits. We have forecasts for Kansai Paint going out to 2027, and you can see them free on our platform here.

Even so, be aware that Kansai Paint is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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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.