Shibaura Mechatronics Corporation Just Beat Revenue Estimates By 7.5%

Investors in Shibaura Mechatronics Corporation (TSE:6590) had a good week, as its shares rose 4.4% to close at JP¥10,760 following the release of its half-yearly results. Results overall were respectable, with statutory earnings of JP¥313 per share roughly in line with what the analysts had forecast. Revenues of JP¥36b came in 7.5% ahead of analyst predictions. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Shibaura Mechatronics

After the latest results, the four analysts covering Shibaura Mechatronics are now predicting revenues of JP¥75.5b in 2025. If met, this would reflect an okay 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 2.9% to JP¥708. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥74.0b and earnings per share (EPS) of JP¥684 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 6.1% to JP¥13,000, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Shibaura Mechatronics, with the most bullish analyst valuing it at JP¥18,000 and the most bearish at JP¥10,000 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.

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 Shibaura Mechatronics' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.6% growth on an annualised basis. This is compared to a historical growth rate of 9.8% 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 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Shibaura Mechatronics 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 Shibaura Mechatronics' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Shibaura Mechatronics. Long-term earnings power is much more important than next year's profits. We have forecasts for Shibaura Mechatronics 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 2 warning signs for Shibaura Mechatronics 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.