Nippon Shokubai Co., Ltd. (TSE:4114) shareholders are probably feeling a little disappointed, since its shares fell 4.3% to JP¥2,401 in the week after its latest half-year results. Results overall were respectable, with statutory earnings of JP¥112 per share roughly in line with what the analysts had forecast. Revenues of JP¥112b came in 2.9% ahead of analyst predictions. 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, Nippon Shokubai's three analysts currently expect revenues in 2027 to be JP¥438.2b, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 5.1% to JP¥135 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥462.8b and earnings per share (EPS) of JP¥145 in 2027. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
Check out our latest analysis for Nippon Shokubai
The analysts made no major changes to their price target of JP¥2,293, suggesting the downgrades are not expected to have a long-term impact on Nippon Shokubai's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Nippon Shokubai, with the most bullish analyst valuing it at JP¥2,700 and the most bearish at JP¥1,980 per share. 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. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 2.2% growth on an annualised basis. That is in line with its 2.5% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 5.4% annually. So it's pretty clear that Nippon Shokubai is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at JP¥2,293, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Nippon Shokubai. Long-term earnings power is much more important than next year's profits. We have forecasts for Nippon Shokubai going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Nippon Shokubai you should know about.
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