Earnings Miss: LIXIL Corporation Missed EPS And Analysts Are Revising Their Forecasts
Last week, you might have seen that LIXIL Corporation (TSE:5938) released its first-quarter result to the market. The early response was not positive, with shares down 9.3% to JP¥1,720 in the past week. Revenues came in at JP¥379b, in line with estimates, while LIXIL reported a statutory loss of JP¥12.20 per share, well short of prior analyst forecasts for a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from LIXIL's eight analysts is for revenues of JP¥1.58t in 2027. This would reflect a reasonable 3.8% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 123% to JP¥43.01. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.58t and earnings per share (EPS) of JP¥52.31 in 2027. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Check out our latest analysis for LIXIL
The consensus price target held steady at JP¥1,856, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values LIXIL at JP¥2,200 per share, while the most bearish prices it at JP¥1,600. 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.
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. The analysts are definitely expecting LIXIL's growth to accelerate, with the forecast 5.1% annualised growth to the end of 2027 ranking favourably alongside historical growth of 1.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that LIXIL is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for LIXIL. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at JP¥1,856, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on LIXIL. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple LIXIL analysts - going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with LIXIL , and understanding these should be part of your investment process.
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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.