Earnings Beat: Square Enix Holdings Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Shareholders might have noticed that Square Enix Holdings Co., Ltd. (TSE:9684) filed its quarterly result this time last week. The early response was not positive, with shares down 4.2% to JP¥4,749 in the past week. Revenues of JP¥70b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of JP¥88.52 an impressive 36% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Square Enix Holdings after the latest results.

Check out our latest analysis for Square Enix Holdings

Following the recent earnings report, the consensus from 16 analysts covering Square Enix Holdings is for revenues of JP¥327.4b in 2025. This implies a measurable 3.9% decline in revenue compared to the last 12 months. Per-share earnings are expected to surge 71% to JP¥274. In the lead-up to this report, the analysts had been modelling revenues of JP¥330.6b and earnings per share (EPS) of JP¥285 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.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥5,427, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Square Enix Holdings, with the most bullish analyst valuing it at JP¥7,000 and the most bearish at JP¥4,600 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.1% by the end of 2025. This indicates a significant reduction from annual growth of 5.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Square Enix Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Square Enix Holdings analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Square Enix Holdings that you need to take into consideration.

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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.