Results: NEC Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

NEC Corporation (TSE:6701) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of JP¥716b, some 2.9% above estimates, and statutory earnings per share (EPS) coming in at JP¥14.49, 159% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, NEC's eleven analysts currently expect revenues in 2026 to be JP¥3.45t, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 10.0% to JP¥165. Before this earnings report, the analysts had been forecasting revenues of JP¥3.45t and earnings per share (EPS) of JP¥163 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for NEC

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥4,283. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic NEC analyst has a price target of JP¥4,800 per share, while the most pessimistic values it at JP¥3,500. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's pretty clear that there is an expectation that NEC's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 0.2% growth on an annualised basis. This is compared to a historical growth rate of 3.7% 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 5.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that NEC is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at JP¥4,283, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on NEC. Long-term earnings power is much more important than next year's profits. We have forecasts for NEC going out to 2028, and you can see them free on our platform here.

We also provide an overview of the NEC Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.