Revenue Beat: Toei Animation Co.,Ltd. Beat Analyst Estimates By 17%

Investors in Toei Animation Co.,Ltd. (TSE:4816) had a good week, as its shares rose 10.0% to close at JP¥2,456 following the release of its first-quarter results. It was a mildly positive result, with revenues exceeding expectations at JP¥23b, while statutory earnings per share (EPS) of JP¥91.93 were in line with analyst forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Toei AnimationLtd

Following the recent earnings report, the consensus from eight analysts covering Toei AnimationLtd is for revenues of JP¥86.5b in 2025. This implies a noticeable 5.8% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to descend 13% to JP¥89.01 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥85.2b and earnings per share (EPS) of JP¥87.13 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at JP¥2,683, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Toei AnimationLtd at JP¥3,200 per share, while the most bearish prices it at JP¥1,950. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Toei AnimationLtd shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 7.7% annualised decline to the end of 2025. That is a notable change from historical growth of 14% 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 5.7% per year. It's pretty clear that Toei AnimationLtd's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Toei AnimationLtd following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Toei AnimationLtd's revenue is expected to 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 Toei AnimationLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Toei AnimationLtd analysts - 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 1 warning sign with Toei AnimationLtd , and understanding it 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com