Central Japan Railway Company Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Central Japan Railway Company (TSE:9022) just released its first-quarter report and things are looking bullish. The company beat expectations with revenues of JP¥435b arriving 3.8% ahead of forecasts. Statutory earnings per share (EPS) were JP¥122, 7.6% ahead of estimates. 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.

See our latest analysis for Central Japan Railway

Following last week's earnings report, Central Japan Railway's twelve analysts are forecasting 2025 revenues to be JP¥1.77t, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 6.9% to JP¥391 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.76t and earnings per share (EPS) of JP¥389 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¥3,975. 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 Central Japan Railway analyst has a price target of JP¥4,700 per share, while the most pessimistic values it at JP¥3,220. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Central Japan Railway's past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2025. That would be a definite improvement, given that the past five years have seen revenue shrink 1.5% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.2% annually. So it's pretty clear that, although revenues are improving, Central Japan Railway is still expected to grow slower than the 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. 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.

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. At Simply Wall St, we have a full range of analyst estimates for Central Japan Railway going out to 2027, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Central Japan Railway that you should be aware of.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com