Earnings Beat: Sumco Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in Sumco Corporation (TSE:3436) had a good week, as its shares rose 4.6% to close at JP¥1,218 following the release of its half-yearly results. Although revenues of JP¥205b were in line with analyst expectations, Sumco surprised on the earnings front, with an unexpected (statutory) profit of JP¥0.10 per share a nice improvement on the losses that the analystsforecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following last week's earnings report, Sumco's 16 analysts are forecasting 2025 revenues to be JP¥410.2b, approximately in line with the last 12 months. The company is forecast to report a statutory loss of JP¥22.06 in 2025, a sharp decline from a profit over the last year. Before this earnings announcement, the analysts had been modelling revenues of JP¥411.1b and losses of JP¥14.98 per share in 2025. So it's pretty clear the analysts have mixed opinions on Sumco even after this update; although they reconfirmed their revenue numbers, it came at the cost of a very substantial increase in per-share losses.

View our latest analysis for Sumco

As a result, there was no major change to the consensus price target of JP¥1,403, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sumco, with the most bullish analyst valuing it at JP¥2,900 and the most bearish at JP¥965 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Sumco's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.2% growth on an annualised basis. This is compared to a historical growth rate of 7.7% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% 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 Sumco.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Sumco. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at JP¥1,403, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Sumco. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Sumco analysts - going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for Sumco (1 doesn't sit too well with us!) that we have uncovered.

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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.