Earnings Update: Here's Why Analysts Just Lifted Their Daiei Kankyo Co., Ltd. (TSE:9336) Price Target To JP¥4,450
It's been a good week for Daiei Kankyo Co., Ltd. (TSE:9336) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.8% to JP¥3,900. It was a workmanlike result, with revenues of JP¥24b coming in 2.7% ahead of expectations, and statutory earnings per share of JP¥160, in line with analyst appraisals. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Daiei Kankyo's four analysts are now forecasting revenues of JP¥96.4b in 2027. This would be a credible 4.8% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be JP¥168, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of JP¥93.9b and earnings per share (EPS) of JP¥166 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small increase to to revenue forecasts.
See our latest analysis for Daiei Kankyo
The analysts increased their price target 7.2% to JP¥4,450, perhaps signalling that higher revenues are a strong leading indicator for Daiei Kankyo's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Daiei Kankyo at JP¥4,900 per share, while the most bearish prices it at JP¥4,000. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Daiei Kankyo's revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2027 being well below the historical 8.7% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.4% annually. So it's pretty clear that, while Daiei Kankyo's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 forecasts for Daiei Kankyo going out to 2029, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Daiei Kankyo 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.