Air Water Inc. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts
Shareholders might have noticed that Air Water Inc. (TSE:4088) filed its yearly result this time last week. The early response was not positive, with shares down 2.9% to JP¥2,543 in the past week. Revenues fell 8.4% short of expectations, at JP¥1.1t. Earnings correspondingly dipped, with Air Water reporting a statutory loss of JP¥279 per share, whereas the analysts had previously modelled a profit in this period. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the three analysts covering Air Water are now predicting revenues of JP¥1.15t in 2027. If met, this would reflect a decent 8.0% improvement in revenue compared to the last 12 months. Air Water is also expected to turn profitable, with statutory earnings of JP¥191 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.23t and earnings per share (EPS) of JP¥260 in 2027. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
View our latest analysis for Air Water
The analysts made no major changes to their price target of JP¥2,557, suggesting the downgrades are not expected to have a long-term impact on Air Water's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Air Water analyst has a price target of JP¥3,200 per share, while the most pessimistic values it at JP¥1,770. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Air Water shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Air Water's rate of growth is expected to accelerate meaningfully, with the forecast 8.0% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 5.8% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Air Water is expected to grow much faster than its 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 downgraded Air Water's revenue estimates, but industry data suggests that it is expected to grow faster 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. We have estimates - from multiple Air Water analysts - going out to 2028, and you can see them free on our platform here.
You still need to take note of risks, for example - Air Water has 2 warning signs we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.