Investors in Koei Tecmo Holdings Co., Ltd. (TSE:3635) had a good week, as its shares rose 8.4% to close at JP¥1,649 following the release of its first-quarter results. Revenues of JP¥17b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of JP¥33.97 an impressive 30% ahead of estimates. 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 nine analysts covering Koei Tecmo Holdings provided consensus estimates of JP¥88.3b revenue in 2027, which would reflect a measurable 2.9% decline over the past 12 months. Statutory earnings per share are expected to dive 25% to JP¥108 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥88.9b and earnings per share (EPS) of JP¥106 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
View our latest analysis for Koei Tecmo Holdings
With no major changes to earnings forecasts, the consensus price target fell 5.0% to JP¥1,898, suggesting that the analysts might have previously been hoping for an earnings upgrade. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Koei Tecmo Holdings at JP¥2,500 per share, while the most bearish prices it at JP¥1,300. 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.
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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.8% by the end of 2027. This indicates a significant reduction from annual growth of 4.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.1% per year. It's pretty clear that Koei Tecmo Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Koei Tecmo Holdings' revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Koei Tecmo Holdings 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 2 warning signs for Koei Tecmo Holdings you should be aware of, and 1 of them is significant.
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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.