Canon Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Canon Inc. (TSE:7751) filed its first-quarter result this time last week. The early response was not positive, with shares down 3.1% to JP¥4,214 in the past week. Revenues of JP¥989b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at JP¥60.70, missing estimates by 5.8%. 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 Canon

Following the latest results, Canon's twelve analysts are now forecasting revenues of JP¥4.32t in 2024. This would be a satisfactory 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 12% to JP¥305. Before this earnings report, the analysts had been forecasting revenues of JP¥4.32t and earnings per share (EPS) of JP¥304 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥4,308. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Canon at JP¥5,300 per share, while the most bearish prices 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.

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. We can infer from the latest estimates that forecasts expect a continuation of Canon'shistorical trends, as the 4.0% annualised revenue growth to the end of 2024 is roughly in line with the 3.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.5% per year. So although Canon is expected to maintain its revenue growth rate, it's definitely expected to grow faster than 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Canon analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Canon is showing 1 warning sign in our investment analysis , 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.