SCREEN Holdings Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models
It's shaping up to be a tough period for SCREEN Holdings Co., Ltd. (TSE:7735), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (JP¥122b) coming in 21% below what they had expected. Statutory earnings per share of JP¥55.47 fell 50% short. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, SCREEN Holdings' 16 analysts are now forecasting revenues of JP¥747.1b in 2027. This would be a huge 26% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 37% to JP¥620. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥738.5b and earnings per share (EPS) of JP¥620 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
View our latest analysis for SCREEN Holdings
There were no changes to revenue or earnings estimates or the price target of JP¥18,038, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on SCREEN Holdings, with the most bullish analyst valuing it at JP¥26,900 and the most bearish at JP¥11,600 per share. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting SCREEN Holdings' growth to accelerate, with the forecast 36% annualised growth to the end of 2027 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that SCREEN Holdings is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
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 forecasts for SCREEN Holdings going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with SCREEN Holdings , and understanding this should be part of your investment process.
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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.