Kadokawa Corporation Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

There's been a notable change in appetite for Kadokawa Corporation (TSE:9468) shares in the week since its half-yearly report, with the stock down 12% to JP¥3,041. Revenues came in 7.1% below expectations, at JP¥134b. Statutory earnings per share were relatively better off, with a per-share profit of JP¥53.87 being roughly in line with analyst estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Following last week's earnings report, Kadokawa's seven analysts are forecasting 2026 revenues to be JP¥278.8b, approximately in line with the last 12 months. Per-share earnings are expected to jump 119% to JP¥86.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥287.4b and earnings per share (EPS) of JP¥89.74 in 2026. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

View our latest analysis for Kadokawa

Despite the cuts to forecast earnings, there was no real change to the JP¥3,809 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Kadokawa analyst has a price target of JP¥4,610 per share, while the most pessimistic values it at JP¥2,900. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Kadokawa's revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2026 being well below the historical 6.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kadokawa.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kadokawa. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kadokawa analysts - going out to 2028, and you can see them free on our platform here.

You still need to take note of risks, for example - Kadokawa has 1 warning sign we think 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.