It's been a good week for Nippon Steel Corporation (TSE:5401) shareholders, because the company has just released its latest first-quarter results, and the shares gained 3.6% to JP¥684. It was a pretty mixed result, with revenues beating expectations to hit JP¥2.8t. Statutory earnings fell 7.1% short of analyst forecasts, reaching JP¥14.40 per share. 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 most recent consensus for Nippon Steel from nine analysts is for revenues of JP¥12t in 2027. If met, it would imply a meaningful 8.3% increase on its revenue over the past 12 months. Statutory earnings per share are expected to dip 2.9% to JP¥53.58 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥11t and earnings per share (EPS) of JP¥54.03 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.
View our latest analysis for Nippon Steel
It may not be a surprise to see thatthe analysts have reconfirmed their price target of JP¥688, implying that the uplift in revenue is not expected to greatly contribute to Nippon Steel's valuation in the near term. 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. The most optimistic Nippon Steel analyst has a price target of JP¥840 per share, while the most pessimistic values it at JP¥470. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Nippon Steel'shistorical trends, as the 11% annualised revenue growth to the end of 2027 is roughly in line with the 9.9% 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 4.2% per year. So although Nippon Steel is expected to maintain its revenue growth rate, it's definitely expected to grow faster 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Nippon Steel going out to 2029, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Nippon Steel (1 is a bit unpleasant!) that we have uncovered.
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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.