Nippon Steel Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders might have noticed that Nippon Steel Corporation (TSE:5401) filed its annual result this time last week. The early response was not positive, with shares down 4.7% to JP¥3,310 in the past week. It looks like a credible result overall - although revenues of JP¥8.9t were in line with what the analysts predicted, Nippon Steel surprised by delivering a statutory profit of JP¥597 per share, a notable 16% above expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Nippon Steel

Taking into account the latest results, the most recent consensus for Nippon Steel from nine analysts is for revenues of JP¥9.20t in 2025. If met, it would imply a credible 3.7% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to fall 15% to JP¥509 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥9.26t and earnings per share (EPS) of JP¥521 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at JP¥4,160, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Nippon Steel analyst has a price target of JP¥4,900 per share, while the most pessimistic values it at JP¥2,600. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Nippon Steel's revenue growth is expected to slow, with the forecast 3.7% annualised growth rate until the end of 2025 being well below the historical 9.8% p.a. growth over the last five years. Compare this to the 64 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.6% per year. So it's pretty clear that, while Nippon Steel's revenue growth is expected to slow, it's expected to grow roughly in line with 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 Nippon Steel. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at JP¥4,160, 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 Nippon Steel. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Nippon Steel analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Nippon Steel that you should be aware of.

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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.