Earnings Beat: Rakuten Group, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
There's been a notable change in appetite for Rakuten Group, Inc. (TSE:4755) shares in the week since its half-yearly report, with the stock down 11% to JP¥745. It looks like a credible result overall - although revenues of JP¥1.3t were what the analysts expected, Rakuten Group surprised by delivering a statutory profit of JP¥3.54 per share, instead of the previously forecast loss. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Rakuten Group's 15 analysts is for revenues of JP¥2.78t in 2026. This would reflect an okay 5.1% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 48% to JP¥15.22. Yet prior to the latest earnings, the analysts had been forecasting revenues of JP¥2.75t and losses of JP¥12.72 per share in 2026. While this year's revenue estimates held steady, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
View our latest analysis for Rakuten Group
The consensus price target held steady at JP¥961, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's 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. There are some variant perceptions on Rakuten Group, with the most bullish analyst valuing it at JP¥1,400 and the most bearish at JP¥575 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. The period to the end of 2026 brings more of the same, according to the analysts, with revenue forecast to display 10% growth on an annualised basis. That is in line with its 9.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.3% per year. So it's pretty clear that Rakuten Group is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥961, 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 forecasts for Rakuten Group going out to 2028, and you can see them free on our platform here.
You can also view our analysis of Rakuten Group's balance sheet, and whether we think Rakuten Group is carrying too much debt, for free on our platform here.
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.