Canon Inc. Just Missed EPS By 50%: Here's What Analysts Think Will Happen Next

Last week saw the newest full-year earnings release from Canon Inc. (TSE:7751), an important milestone in the company's journey to build a stronger business. Statutory earnings per share fell badly short of expectations, coming in at JP¥166, some 50% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥4.5t. 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 Canon

Taking into account the latest results, the current consensus from Canon's eleven analysts is for revenues of JP¥4.64t in 2025. This would reflect a modest 3.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 117% to JP¥369. In the lead-up to this report, the analysts had been modelling revenues of JP¥4.59t and earnings per share (EPS) of JP¥368 in 2025. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥5,298. 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. There are some variant perceptions on Canon, with the most bullish analyst valuing it at JP¥6,200 and the most bearish at JP¥5,000 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's pretty clear that there is an expectation that Canon's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 6.8% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.4% annually. Factoring in the forecast slowdown in growth, it looks like Canon is forecast to grow at about the same rate as 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Canon going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Canon 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.