Earnings Beat: Citizen Watch Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a pretty great week for Citizen Watch Co., Ltd. (TSE:7762) shareholders, with its shares surging 15% to JP¥1,219 in the week since its latest half-year results. Citizen Watch reported JP¥159b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of JP¥48.70 beat expectations, being 7.7% higher than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Citizen Watch after the latest results.

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Taking into account the latest results, Citizen Watch's six analysts currently expect revenues in 2026 to be JP¥321.3b, approximately in line with the last 12 months. Statutory earnings per share are forecast to sink 12% to JP¥84.70 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥316.7b and earnings per share (EPS) of JP¥81.60 in 2026. So the consensus seems to have become somewhat more optimistic on Citizen Watch's earnings potential following these results.

View our latest analysis for Citizen Watch

There's been no major changes to the consensus price target of JP¥988, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Citizen Watch analyst has a price target of JP¥1,400 per share, while the most pessimistic values it at JP¥800. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Citizen Watch's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Citizen Watch's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 1.0% growth on an annualised basis. This is compared to a historical growth rate of 7.7% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Citizen Watch is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Citizen Watch's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 in mind, we wouldn't be too quick to come to a conclusion on Citizen Watch. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Citizen Watch analysts - going out to 2028, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Citizen Watch (of which 1 can't be ignored!) 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.