Earnings Miss: NTN Corporation Missed EPS By 62% And Analysts Are Revising Their Forecasts
Investors in NTN Corporation (TSE:6472) had a good week, as its shares rose 4.6% to close at JP¥390 following the release of its first-quarter results. Statutory earnings per share fell badly short of expectations, coming in at JP¥3.24, some 62% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥212b. 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.
Taking into account the latest results, NTN's three analysts currently expect revenues in 2027 to be JP¥842.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 7.3% to JP¥24.57. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥839.0b and earnings per share (EPS) of JP¥25.41 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
See our latest analysis for NTN
It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥440, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic NTN analyst has a price target of JP¥500 per share, while the most pessimistic values it at JP¥400. This is a very narrow spread of estimates, implying either that NTN is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that NTN's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 0.4% growth on an annualised basis. This is compared to a historical growth rate of 5.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than NTN.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for NTN. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NTN's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥440, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple NTN analysts - going out to 2029, and you can see them free on our platform here.
Even so, be aware that NTN is showing 4 warning signs in our investment analysis , you should know about...
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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.