Furukawa Electric stock price surges 23%, benefiting from upgraded earnings outlook and increased dividends

Investing.com – Furukawa Electric’s stock closed up 22.9% on Tuesday after the company raised its full-year outlook and significantly increased its dividend payout.

Although Furukawa Electric’s operating profit for the third quarter was 15.8 billion yen, slightly above the market expectation of 15.6 billion yen, the company unexpectedly revised its full-year forecast upward from 53 billion yen to 56 billion yen, surpassing analysts’ expected 52.8 billion yen.

The company also announced a substantial dividend increase, raising the dividend per share from 40 yen to 160 yen, with a dividend yield of 1.1%.

Market optimism was particularly driven by the earnings beat. Despite weak performance in the functional products business, the communication solutions division showed strong momentum. The fourth-quarter operating profit guidance for the communication solutions division is now expected to be 7.2 billion yen, a sequential increase of 4.6 billion yen.

This performance indicates growing market confidence that Furukawa Electric’s data center-related products are gaining recognition. Previously, earnings surprises typically came from other business areas, so this shift in performance drivers has led the market to be optimistic that Furukawa Electric can narrow the gap with competitor Fujikura, which has outperformed Furukawa Electric in recent years.

The comparison between the two companies explains why their stock prices have experienced significant changes, despite the earnings beat being relatively modest compared to analyst consensus expectations.

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