Hitachi Construction Machinery Co., Ltd. (TSE:6305) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was not a great result overall. While revenues of JP¥698b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 15% to hit JP¥103 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Hitachi Construction Machinery's nine analysts is for revenues of JP¥1.49t in 2027. This reflects a credible 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 8.1% to JP¥444. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.49t and earnings per share (EPS) of JP¥430 in 2027. So the consensus seems to have become somewhat more optimistic on Hitachi Construction Machinery's earnings potential following these results.
See our latest analysis for Hitachi Construction Machinery
The consensus price target was unchanged at JP¥6,273, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. The most optimistic Hitachi Construction Machinery analyst has a price target of JP¥9,210 per share, while the most pessimistic values it at JP¥4,300. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Hitachi Construction Machinery's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 6.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hitachi Construction Machinery is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Hitachi Construction Machinery following these results. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Hitachi Construction Machinery going out to 2029, and you can see them free on our platform here..
Even so, be aware that Hitachi Construction Machinery is showing 1 warning sign in our investment analysis , you should know about...
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