Earnings Miss: Square Enix Holdings Co., Ltd. Missed EPS By 37% And Analysts Are Revising Their Forecasts

Square Enix Holdings Co., Ltd. (TSE:9684) just released its latest first-quarter report and things are not looking great. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of JP¥59b missed by 11%, and statutory earnings per share of JP¥40.00 fell short of forecasts by 37%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Taking into account the latest results, the 15 analysts covering Square Enix Holdings provided consensus estimates of JP¥305.6b revenue in 2026, which would reflect a measurable 2.6% decline over the past 12 months. Statutory earnings per share are predicted to shoot up 72% to JP¥266. In the lead-up to this report, the analysts had been modelling revenues of JP¥306.6b and earnings per share (EPS) of JP¥260 in 2026. So the consensus seems to have become somewhat more optimistic on Square Enix Holdings' earnings potential following these results.

See our latest analysis for Square Enix Holdings

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.2% to JP¥8,094. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Square Enix Holdings at JP¥11,300 per share, while the most bearish prices it at JP¥5,900. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 revenue is expected to reverse, with a forecast 3.5% annualised decline to the end of 2026. That is a notable change from historical growth of 1.0% 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 9.6% 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Square Enix Holdings' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Square Enix Holdings going out to 2028, and you can see them free on our platform here..

We also provide an overview of the Square Enix Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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

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.