Analysts Just Slashed Their Kaori Heat Treatment Co., Ltd. (TWSE:8996) EPS Numbers

Today is shaping up negative for Kaori Heat Treatment Co., Ltd. (TWSE:8996) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Kaori Heat Treatment's three analysts is for revenues of NT$5.5b in 2025 which - if met - would reflect a major 39% increase on its sales over the past 12 months. Per-share earnings are expected to soar 53% to NT$9.92. Previously, the analysts had been modelling revenues of NT$6.6b and earnings per share (EPS) of NT$12.13 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for Kaori Heat Treatment

Analysts made no major changes to their price target of NT$352, suggesting the downgrades are not expected to have a long-term impact on Kaori Heat Treatment's valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Kaori Heat Treatment's rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 18% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Kaori Heat Treatment is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Kaori Heat Treatment. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Kaori Heat Treatment.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Kaori Heat Treatment analysts - going out to 2026, and you can see them free on our platform 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.