Nintendo Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Nintendo Co., Ltd. (TSE:7974) just released its first-quarter report and things are looking bullish. Nintendo delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting JP¥518b-19% above indicated-andJP¥128-106% above forecasts- respectively 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.

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Following the latest results, Nintendo's 27 analysts are now forecasting revenues of JP¥2.34t in 2027. This would be an okay 3.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to sink 10% to JP¥371 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥2.33t and earnings per share (EPS) of JP¥347 in 2027. So the consensus seems to have become somewhat more optimistic on Nintendo's earnings potential following these results.

Check out our latest analysis for Nintendo

The consensus price target was unchanged at JP¥10,172, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Nintendo at JP¥21,260 per share, while the most bearish prices it at JP¥5,000. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nintendo's past performance and to peers in the same industry. The analysts are definitely expecting Nintendo's growth to accelerate, with the forecast 5.0% annualised growth to the end of 2027 ranking favourably alongside historical growth of 2.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Nintendo is expected to grow at about the same rate as 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 Nintendo following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at JP¥10,172, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Nintendo going out to 2029, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Nintendo 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.