JGC Holdings Corporation Just Beat Revenue By 9.6%: Here's What Analysts Think Will Happen Next
Investors in JGC Holdings Corporation (TSE:1963) had a good week, as its shares rose 7.9% to close at JP¥2,106 following the release of its interim results. Results overall were respectable, with statutory earnings of JP¥173 per share roughly in line with what the analysts had forecast. Revenues of JP¥182b came in 9.6% 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for JGC Holdings from five analysts is for revenues of JP¥727.0b in 2027. If met, it would imply a modest 3.1% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to crater 29% to JP¥191 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥721.0b and earnings per share (EPS) of JP¥185 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
See our latest analysis for JGC Holdings
There's been no major changes to the consensus price target of JP¥2,560, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values JGC Holdings at JP¥3,000 per share, while the most bearish prices it at JP¥1,800. 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. It's pretty clear that there is an expectation that JGC Holdings' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 6.2% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.4% per year. So it's pretty clear that, while JGC Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
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 JGC Holdings following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥2,560, 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 JGC Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for JGC Holdings going out to 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for JGC Holdings you should be aware of, and 1 of them is significant.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.