Sumco Corporation Just Missed EPS By 19%: Here's What Analysts Think Will Happen Next

Shareholders in Sumco Corporation (TSE:3436) had a terrible week, as shares crashed 27% to JP¥1,564 in the week since its latest half-year results. Statutory earnings per share of JP¥21.61 unfortunately missed expectations by 19%, although it was encouraging to see revenues of JP¥198b exceed expectations by 2.9%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Sumco

After the latest results, the 16 analysts covering Sumco are now predicting revenues of JP¥418.6b in 2024. If met, this would reflect a modest 3.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.9% to JP¥80.52. Before this earnings report, the analysts had been forecasting revenues of JP¥423.1b and earnings per share (EPS) of JP¥89.80 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

The consensus price target held steady at JP¥2,655, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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¥3,270 and the most bearish at JP¥1,650 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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. We would highlight that Sumco's revenue growth is expected to slow, with the forecast 7.6% annualised growth rate until the end of 2024 being well below the historical 9.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. 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 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. 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 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 forecasts for Sumco 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.