Earnings Miss: Central Japan Railway Company Missed EPS By 14% And Analysts Are Revising Their Forecasts
Central Japan Railway Company (TSE:9022) 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. Statutory earnings per share of JP¥154 unfortunately missed expectations by 14%, although it was encouraging to see revenues of JP¥1.0t exceed expectations by 4.2%. 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.
Taking into account the latest results, Central Japan Railway's twelve analysts currently expect revenues in 2027 to be JP¥2.06t, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 8.8% to JP¥522 in the same period. In the lead-up to this report, the analysts had been modelling revenues of JP¥2.04t and earnings per share (EPS) of JP¥517 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.
See our latest analysis for Central Japan Railway
It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥4,487. 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. There are some variant perceptions on Central Japan Railway, with the most bullish analyst valuing it at JP¥5,100 and the most bearish at JP¥3,630 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Central Japan Railway shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Central Japan Railway's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Central Japan Railway's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 2.1% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Central Japan Railway is also expected to grow slower than other industry participants.
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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Central Japan Railway's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥4,487, 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. We have forecasts for Central Japan Railway going out to 2029, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Central Japan Railway that you should be aware of.
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