Revenue Beat: ARE Holdings, Inc. Exceeded Revenue Forecasts By 25% And Analysts Are Updating Their Estimates

Shareholders might have noticed that ARE Holdings, Inc. (TSE:5857) filed its quarterly result this time last week. The early response was not positive, with shares down 8.2% to JP¥1,818 in the past week. Revenue of JP¥137b came in a notable 25% ahead of expectations, while statutory earnings of JP¥187 were in line with what the analysts had been forecasting. 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.

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Taking into account the latest results, the dual analysts covering ARE Holdings provided consensus estimates of JP¥535.5b revenue in 2026, which would reflect a measurable 2.8% decline over the past 12 months. Statutory earnings per share are predicted to ascend 11% to JP¥213. In the lead-up to this report, the analysts had been modelling revenues of JP¥485.5b and earnings per share (EPS) of JP¥210 in 2026. There's clearly been a surge in bullishness around the company's revenue pipeline, even if there's no real change in earnings per share forecasts.

See our latest analysis for ARE Holdings

The consensus price target increased 14% to JP¥2,500, with an improved revenue forecast carrying the promise of a more valuable business, in time.

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 would highlight that revenue is expected to reverse, with a forecast 3.7% annualised decline to the end of 2026. That is a notable change from historical growth of 27% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ARE Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2028, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for ARE Holdings you should be aware of, and 1 of them can't be ignored.

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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.