Analysts Have Made A Financial Statement On Disco Corporation's (TSE:6146) Yearly Report

Disco Corporation (TSE:6146) shareholders are probably feeling a little disappointed, since its shares fell 2.6% to JP¥26,760 in the week after its latest full-year results. Disco reported JP¥393b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of JP¥1,143 beat expectations, being 2.5% higher than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Disco after the latest results.

Our free stock report includes 2 warning signs investors should be aware of before investing in Disco. Read for free now.

After the latest results, the 14 analysts covering Disco are now predicting revenues of JP¥412.7b in 2026. If met, this would reflect a reasonable 4.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 3.1% to JP¥1,178. Before this earnings report, the analysts had been forecasting revenues of JP¥429.4b and earnings per share (EPS) of JP¥1,245 in 2026. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Check out our latest analysis for Disco

Despite the cuts to forecast earnings, there was no real change to the JP¥46,547 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Disco, with the most bullish analyst valuing it at JP¥68,400 and the most bearish at JP¥27,500 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Disco's revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2026 being well below the historical 18% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Disco.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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 Disco. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Disco analysts - going out to 2028, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Disco , and understanding them should be part of your investment process.

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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.