Shareholders of Kao Corporation (TSE:4452) will be pleased this week, given that the stock price is up 12% to JP¥3,654 following its latest half-yearly results. Revenues were JP¥872b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of JP¥38.32 were also better than expected, beating analyst predictions by 13%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Kao's 13 analysts are forecasting 2026 revenues to be JP¥1.77t, approximately in line with the last 12 months. Statutory per-share earnings are expected to be JP¥153, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.78t and earnings per share (EPS) of JP¥151 in 2026. 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 Kao
It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥3,696. 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. Currently, the most bullish analyst values Kao at JP¥4,150 per share, while the most bearish prices it at JP¥3,100. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Kao is an easy business to forecast or the the analysts are all using similar assumptions.
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. We would highlight that Kao's revenue growth is expected to slow, with the forecast 2.5% annualised growth rate until the end of 2026 being well below the historical 4.1% 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. Factoring in the forecast slowdown in growth, it seems obvious that Kao is also expected to grow slower than other industry participants.
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 Kao's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥3,696, with the latest estimates not enough to have an impact on their price targets.
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 Kao analysts - going out to 2028, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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.