Koei Tecmo Holdings Co., Ltd. (TSE:3635) investors will be delighted, with the company turning in some strong numbers with its latest results. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 17% higher than the analysts had forecast, at JP¥20b, while EPS were JP¥21.69 beating analyst models by 40%. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus, from the nine analysts covering Koei Tecmo Holdings, is for revenues of JP¥92.2b in 2027. This implies a measurable 2.4% reduction in Koei Tecmo Holdings' revenue over the past 12 months. Statutory earnings per share are expected to decline 19% to JP¥116 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥89.2b and earnings per share (EPS) of JP¥110 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
See our latest analysis for Koei Tecmo Holdings
Despite these upgrades,the analysts have not made any major changes to their price target of JP¥1,944, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Koei Tecmo Holdings' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 4.7% annualised decline to the end of 2027. That is a notable change from historical growth of 4.5% 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 4.5% 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Koei Tecmo Holdings' earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at JP¥1,944, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Koei Tecmo Holdings analysts - going out to 2029, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Koei Tecmo Holdings (1 makes us a bit uncomfortable!) that you should be aware of.
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