Results: JAPAN MATERIAL Co., Ltd. Exceeded Expectations And The Consensus Has Updated Its Estimates
JAPAN MATERIAL Co., Ltd. (TSE:6055) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of JP¥16b, some 6.7% above estimates, and statutory earnings per share (EPS) coming in at JP¥32.23, 21% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on JAPAN MATERIAL after the latest results.
Following the latest results, JAPAN MATERIAL's five analysts are now forecasting revenues of JP¥63.3b in 2027. This would be a modest 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 2.3% to JP¥112 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥62.9b and earnings per share (EPS) of JP¥109 in 2027. So the consensus seems to have become somewhat more optimistic on JAPAN MATERIAL's earnings potential following these results.
Check out our latest analysis for JAPAN MATERIAL
There's been no major changes to the consensus price target of JP¥2,600, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on JAPAN MATERIAL, with the most bullish analyst valuing it at JP¥3,200 and the most bearish at JP¥2,400 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that JAPAN MATERIAL's revenue growth is expected to slow, with the forecast 5.8% annualised growth rate until the end of 2027 being well below the historical 9.7% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. Factoring in the forecast slowdown in growth, it seems obvious that JAPAN MATERIAL is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards JAPAN MATERIAL following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple JAPAN MATERIAL analysts - going out to 2029, and you can see them free on our platform here.
Even so, be aware that JAPAN MATERIAL is showing 1 warning sign 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.