Earnings Miss: JAPAN MATERIAL Co., Ltd. Missed EPS By 25% And Analysts Are Revising Their Forecasts

JAPAN MATERIAL Co., Ltd. (TSE:6055) shareholders are probably feeling a little disappointed, since its shares fell 9.5% to JP¥1,635 in the week after its latest half-yearly results. Statutory earnings per share fell badly short of expectations, coming in at JP¥13.50, some 25% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥23b. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for JAPAN MATERIAL

Taking into account the latest results, the current consensus from JAPAN MATERIAL's four analysts is for revenues of JP¥52.8b in 2025. This would reflect a notable 8.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to grow 18% to JP¥72.65. In the lead-up to this report, the analysts had been modelling revenues of JP¥52.8b and earnings per share (EPS) of JP¥75.36 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥2,485, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on JAPAN MATERIAL, with the most bullish analyst valuing it at JP¥3,000 and the most bearish at JP¥2,000 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await JAPAN MATERIAL shareholders.

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. The analysts are definitely expecting JAPAN MATERIAL's growth to accelerate, with the forecast 17% annualised growth to the end of 2025 ranking favourably alongside historical growth of 8.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect JAPAN MATERIAL to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for JAPAN MATERIAL. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥2,485, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for JAPAN MATERIAL going out to 2027, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for JAPAN MATERIAL that you should be aware of.

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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.