DENSO Corporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
DENSO Corporation (TSE:6902) shareholders are probably feeling a little disappointed, since its shares fell 9.1% to JP¥1,891 in the week after its latest first-quarter results. Statutory earnings per share of JP¥25.51 unfortunately missed expectations by 19%, although it was encouraging to see revenues of JP¥1.9t exceed expectations by 4.0%. 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.
After the latest results, the 19 analysts covering DENSO are now predicting revenues of JP¥7.93t in 2027. If met, this would reflect a modest 3.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 9.9% to JP¥155 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥7.70t and earnings per share (EPS) of JP¥161 in 2027. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a modest to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.
Check out our latest analysis for DENSO
There's been no major changes to the price target of JP¥2,119, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on DENSO, with the most bullish analyst valuing it at JP¥2,500 and the most bearish at JP¥1,670 per share. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DENSO's past performance and to peers in the same industry. We would highlight that DENSO's revenue growth is expected to slow, with the forecast 4.0% annualised growth rate until the end of 2027 being well below the historical 7.1% p.a. growth over the last five years. Compare this to the 102 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.1% per year. So it's pretty clear that, while DENSO's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that DENSO will grow in line with the overall 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for DENSO going out to 2029, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for DENSO 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.