Results: Sumco Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts

Sumco Corporation (TSE:3436) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.5% to hit JP¥94b. Sumco reported statutory earnings per share (EPS) JP¥14.46, which was a notable 11% above what the analysts had forecast. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Sumco

Taking into account the latest results, the consensus forecast from Sumco's 17 analysts is for revenues of JP¥418.1b in 2024. This reflects a satisfactory 2.1% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be JP¥88.89, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of JP¥416.7b and earnings per share (EPS) of JP¥87.12 in 2024. So the consensus seems to have become somewhat more optimistic on Sumco's earnings potential following these results.

There's been no major changes to the consensus price target of JP¥2,629, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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 Sumco, with the most bullish analyst valuing it at JP¥3,175 and the most bearish at JP¥1,940 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. It's pretty clear that there is an expectation that Sumco's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 9.5% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. Factoring in the forecast slowdown in growth, it seems obvious that Sumco is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sumco's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Sumco's revenue is expected to 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 Sumco analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Sumco 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.