Yamato Kogyo Co., Ltd. Just Beat EPS By 9.4%: Here's What Analysts Think Will Happen Next

Investors in Yamato Kogyo Co., Ltd. (TSE:5444) had a good week, as its shares rose 6.8% to close at JP¥8,415 following the release of its full-year results. The result was positive overall - although revenues of JP¥163b were in line with what the analysts predicted, Yamato Kogyo surprised by delivering a statutory profit of JP¥1,099 per share, modestly greater than expected. 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.

View our latest analysis for Yamato Kogyo

Taking into account the latest results, the consensus forecast from Yamato Kogyo's four analysts is for revenues of JP¥170.7b in 2025. This reflects a reasonable 4.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to crater 22% to JP¥860 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥170.4b and earnings per share (EPS) of JP¥887 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.

Despite cutting their earnings forecasts,the analysts have lifted their price target 7.0% to JP¥8,450, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. Currently, the most bullish analyst values Yamato Kogyo at JP¥10,000 per share, while the most bearish prices it at JP¥6,600. 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.

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 Yamato Kogyo's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.4% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 3.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 3.4% per year. So it looks like Yamato Kogyo is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Yamato Kogyo. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Yamato Kogyo 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 1 warning sign for Yamato Kogyo 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.