Earnings Miss: Honda Motor Co., Ltd. Missed EPS By 66% And Analysts Are Revising Their Forecasts
Honda Motor Co., Ltd. (TSE:7267) came out with its half-yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall were not great, with earnings of JP¥16.91 per share falling drastically short of analyst expectations. Meanwhile revenues hit JP¥12t and were slightly better than forecasts. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, Honda Motor's 17 analysts are forecasting 2027 revenues to be JP¥24t, approximately in line with the last 12 months. Earnings are expected to improve, with Honda Motor forecast to report a statutory profit of JP¥167 per share. In the lead-up to this report, the analysts had been modelling revenues of JP¥24t and earnings per share (EPS) of JP¥156 in 2027. So the consensus seems to have become somewhat more optimistic on Honda Motor's earnings potential following these results.
See our latest analysis for Honda Motor
There's been no major changes to the consensus price target of JP¥1,840, 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. Currently, the most bullish analyst values Honda Motor at JP¥2,300 per share, while the most bearish prices it at JP¥1,400. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Honda Motor's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 10.0% over the past five years. Compare this to the 10 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.1% per year. So it's pretty clear that, while Honda Motor's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Honda Motor's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 in mind, we wouldn't be too quick to come to a conclusion on Honda Motor. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Honda Motor analysts - going out to 2029, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Honda Motor that you need to take into consideration.
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