Kadokawa Corporation (TSE:9468) Just Released Its Interim Results And Analysts Are Updating Their Estimates

It's been a sad week for Kadokawa Corporation (TSE:9468), who've watched their investment drop 13% to JP¥2,865 in the week since the company reported its half-yearly result. Results were roughly in line with estimates, with revenues of JP¥136b and statutory earnings per share of JP¥83.42. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Kadokawa

Taking into account the latest results, Kadokawa's seven analysts currently expect revenues in 2025 to be JP¥275.4b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 4.8% to JP¥80.69. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥273.1b and earnings per share (EPS) of JP¥85.03 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at JP¥3,761, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Kadokawa analyst has a price target of JP¥4,300 per share, while the most pessimistic values it at JP¥3,000. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 Kadokawa's revenue growth is expected to slow, with the forecast 3.9% annualised growth rate until the end of 2025 being well below the historical 6.4% p.a. growth over the last five years. Compare this to the 119 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.0% per year. So it's pretty clear that, while Kadokawa's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kadokawa. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 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 Kadokawa , 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.