Renesas Electronics Corporation Just Missed EPS By 8.9%: Here's What Analysts Think Will Happen Next

There's been a major selloff in Renesas Electronics Corporation (TSE:6723) shares in the week since it released its half-yearly report, with the stock down 22% to JP¥2,442. It looks like the results were a bit of a negative overall. While revenues of JP¥711b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 8.9% to hit JP¥33.38 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Renesas Electronics

Following last week's earnings report, Renesas Electronics' twelve analysts are forecasting 2024 revenues to be JP¥1.43t, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 6.6% to JP¥167. Before this earnings report, the analysts had been forecasting revenues of JP¥1.48t and earnings per share (EPS) of JP¥169 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The consensus has reconfirmed its price target of JP¥3,725, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Renesas Electronics' market value. 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. The most optimistic Renesas Electronics analyst has a price target of JP¥5,200 per share, while the most pessimistic values it at JP¥3,100. 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 Renesas Electronics 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.4% by the end of 2024. This indicates a significant reduction from annual growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Renesas Electronics is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Renesas Electronics going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Renesas Electronics you should know about.

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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.

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