Earnings Miss: SoftBank Group Corp. Missed EPS And Analysts Are Revising Their Forecasts
Shareholders might have noticed that SoftBank Group Corp. (TSE:9984) filed its half-yearly result this time last week. The early response was not positive, with shares down 6.1% to JP¥3,738 in the past week. Revenues beat expectations by 11% to hit JP¥2.2t, although earnings fell badly short, with SoftBank Group reported a statutory loss of JP¥197 per share even though the analysts had been forecasting a profit. 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.
Taking into account the latest results, the most recent consensus for SoftBank Group from 15 analysts is for revenues of JP¥8.59t in 2027. If met, it would imply a credible 3.6% increase on its revenue over the past 12 months. Statutory earnings per share are expected to crater 72% to JP¥64.41 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥8.54t and earnings per share (EPS) of JP¥132 in 2027. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
View our latest analysis for SoftBank Group
The consensus price target held steady at JP¥7,667, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic SoftBank Group analyst has a price target of JP¥11,100 per share, while the most pessimistic values it at JP¥4,270. 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. It's clear from the latest estimates that SoftBank Group's rate of growth is expected to accelerate meaningfully, with the forecast 7.3% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 5.9% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that SoftBank Group is expected to grow at about the same rate as the wider 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at JP¥7,667, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for SoftBank Group going out to 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 5 warning signs for SoftBank Group you should be aware of, and 3 of them shouldn't be ignored.
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