DeNA Co., Ltd. (TSE:2432) shareholders are probably feeling a little disappointed, since its shares fell 4.2% to JP¥2,588 in the week after its latest half-yearly results. Statutory earnings per share fell badly short of expectations, coming in at JP¥49.03, some 22% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥76b. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, DeNA's four analysts are forecasting 2027 revenues to be JP¥141.0b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 50% to JP¥537. In the lead-up to this report, the analysts had been modelling revenues of JP¥141.0b and earnings per share (EPS) of JP¥407 in 2027. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.
View our latest analysis for DeNA
There's been no major changes to the consensus price target of JP¥2,697, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic DeNA analyst has a price target of JP¥3,100 per share, while the most pessimistic values it at JP¥2,490. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. It's pretty clear that there is an expectation that DeNA's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 0.2% growth on an annualised basis. This is compared to a historical growth rate of 3.9% 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 4.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that DeNA 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 DeNA following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that DeNA's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥2,697, 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. At Simply Wall St, we have a full range of analyst estimates for DeNA going out to 2029, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for DeNA (1 is a bit unpleasant!) that you need to be mindful of.
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