Things Look Grim For Furuya Metal Co., Ltd. (TSE:7826) After Today's Downgrade

Market forces rained on the parade of Furuya Metal Co., Ltd. (TSE:7826) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Bidders are definitely seeing a different story, with the stock price of JP¥13,070 reflecting a 13% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the most recent consensus for Furuya Metal from its three analysts is for revenues of JP¥49b in 2025 which, if met, would be a decent 9.9% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 21% to JP¥1,063. Before this latest update, the analysts had been forecasting revenues of JP¥56b and earnings per share (EPS) of JP¥1,188 in 2025. Indeed, we can see that the analysts are a lot more bearish about Furuya Metal's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Furuya Metal

Analysts made no major changes to their price target of JP¥15,233, suggesting the downgrades are not expected to have a long-term impact on Furuya Metal's valuation.

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 Furuya Metal's revenue growth is expected to slow, with the forecast 7.8% annualised growth rate until the end of 2025 being well below the historical 20% 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 13% annually. Factoring in the forecast slowdown in growth, it seems obvious that Furuya Metal is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Furuya Metal.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Furuya Metal going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.