Sumitomo Corporation (TSE:8053) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 5.1% to hit JP¥1.9t. Sumitomo reported statutory earnings per share (EPS) JP¥39.95, which was a notable 19% above what the analysts had forecast. 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.
Following last week's earnings report, Sumitomo's eleven analysts are forecasting 2027 revenues to be JP¥7.65t, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 5.5% to JP¥137. In the lead-up to this report, the analysts had been modelling revenues of JP¥7.71t and earnings per share (EPS) of JP¥135 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.
See our latest analysis for Sumitomo
It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥1,958. 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. Currently, the most bullish analyst values Sumitomo at JP¥2,263 per share, while the most bearish prices it at JP¥1,660. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Sumitomo's revenue growth is expected to slow, with the forecast 2.7% annualised growth rate until the end of 2027 being well below the historical 7.3% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sumitomo.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than 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.
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 estimates - from multiple Sumitomo analysts - going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sumitomo (at least 1 which is concerning) , and understanding them should be part of your investment process.
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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.