News Flash: 7 Analysts Think Mitsubishi Materials Corporation (TSE:5711) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for Mitsubishi Materials Corporation (TSE:5711), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

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Following the latest downgrade, the current consensus, from the seven analysts covering Mitsubishi Materials, is for revenues of JP¥1.6t in 2026, which would reflect an uncomfortable 11% reduction in Mitsubishi Materials' sales over the past 12 months. Per-share earnings are expected to soar 39% to JP¥158. Previously, the analysts had been modelling revenues of JP¥1.8t and earnings per share (EPS) of JP¥178 in 2026. Indeed, we can see that the analysts are a lot more bearish about Mitsubishi Materials' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Mitsubishi Materials

The average price target climbed 17% to JP¥2,956 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mitsubishi Materials' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 21% by the end of 2026. This indicates a significant reduction from annual growth of 3.5% 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 2.9% per year. It's pretty clear that Mitsubishi Materials' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

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.