[Updated 12/21/2021] Toyota engine update
Toyota Motor Stock (NYSE: TM) is up 3% since the second quarter of fiscal 2022 results. The company has handled the global chip shortage better than its peers, as evidenced by the fact that global sales volume was almost flat compared to the previous year, when most other automakers saw lower volumes. Recently the company announced that it will invest $13.6 billion in battery technology over the next decade, including a $9 billion investment in production indicating a move towards adding a higher volume of electric vehicles in its range. In the recently announced second quarter of fiscal 2022, the company reported revenue of 7.5 trillion yen ($68.5 billion), up 11% year-on-year. Gains were recorded at ¥45.01 from ¥33.66 in the same period a year earlier. The company also carried out a five-for-one stock split as of September 30, 2021, although there was no impact on the ADR price as the ratio was adjusted to 1 ADR for every 10 shares. ordinary shares (previously 1 ADR for every 2 ordinary shares)
We are waiting Toyota Motor’s revenue increase by 9% to 29.7 trillion yen ($274.6 billion). In addition, its net income is expected to reach 3 trillion yen ($27.4 billion), which will bring the EPS figure to 211.12 yen ($19.55) for fiscal 2022. 2023, we expect revenue to reach 31 trillion yen ($287.1 billion) revenue to 3.1 trillion yen ($29.1 billion). This will bring the EPS figure to ¥224.25 ($20.76) for FY2023 which, coupled with the P/E multiple of 95.1x and a yen to dollar exchange rate of 0.00926 $, will lead to Toyota Motor Valuation around $197, implying an upside of more than 5%.
Below is our previous coverage of Toyota Motor’s stock where you can follow our view over time.
[Updated 09/14/2021] Will Toyota Motor’s stock slow down?
Toyota Motor Stock (NYSE: TM) has been hovering around the current range since June 2021 without a small dip in mid-August. The company has handled the global chip shortage better than its peers. This was demonstrated by the fact that Toyota Motor outsold General Motors
We don’t expect much change in revenue or earnings over the next two years due to investment in battery technology. We expect Toyota Motor’s revenue to grow 7.1% to 29.1 trillion yen ($269.9 billion). In addition, its net income is expected to reach 2.9 trillion yen ($27 billion), increasing the EPS figure to 1,043.37 yen ($19.32) for fiscal 2022. For fiscal 2023, we expect revenue to reach 29.9 trillion yen ($277.3 billion) and net income to 3.1 trillion yen ($28.4 billion). This will bring the EPS figure to ¥1,095.85 ($20.29) for FY2023, which, coupled with the P/E multiple of 18.3x and a yen/dollar exchange rate of $0.00926, will lead to Toyota Motor’s valuation around $186, implying an upside of more than 5%.
[Updated 06/23/2021] Will Toyota stock continue to rally for future growth?
Toyota Motor Stock (NYSE: TM) has gained 56% since the end of fiscal 2019 (end of March 2019) and 14.6% since the end of fiscal 2021 (end of March 2021) to reach $63 currently. The stock has been steadily rising since the results for fiscal year 2021 (ended March 2021) in May 2021. For fiscal year 2021, the company saw revenue decline 11% year-over-year to 272 trillion yen ($256.5 billion) while earnings improved mainly due to higher interest and dividends. income at ¥802.23 ($7.56) per share. The stock saw growth as the rally continued in the fourth quarter of fiscal 2021, where revenue rose 8.3% year-on-year to 768.9 trillion yen ($71 billion). ). Sales volume also recovered and increased 5% year-over-year for the fourth quarter of fiscal 2021.
We expect the momentum to continue in fiscal 2022 (fiscal year ends March 2022) and Toyota Motor’s revenue to grow 7.1% to 29.1 trillion yen (269.9 billion of dollars). Additionally, its net income is expected to reach 2.9 trillion yen ($27 billion), boosting the EPS figure to 1,043.37 yen for FY2022, which, coupled with the P/E multiple of 18.8x and at a yen/dollar exchange rate of $0.00926 leads to the valuation of Toyota Motor around $190, implying a rise of more than 10%.
[Updated 11/19/2020] Toyota Motor Update
Having gained more than 28% since the lows of March 23, Toyota Motor Stock (NYSE: TM) is now only 5% up. TM’s stock fell from $111 to $142 from the recent low against the S&P 500 which moved 60%. The company has seen a steady increase in revenue over the past few years and its P/E multiple has increased. We believe the stock, after the recent rally, is close to near-term potential.
Due to the Covid-19 crisis, Toyota Motor Corp, one of the world’s largest automakers, saw its revenue drop 26% in the first six months of the year compared to the same period of the previous year. In the second quarter of 2021 (ending September 2020), Toyota reported a profit of ¥225.21 while total revenue was recorded at 6.774 billion yen, down 11% year-on-year. Additionally, the company reported 1.29 trillion yen in cash inflow from operating activities for the first six months.
We expect Toyota Motor’s revenue to remain stable at around 29.93 trillion yen for fiscal 2021 (fiscal year ends March). Additionally, its net income is expected to fall 5% year-on-year, bringing the EPS figure down to 723.27 yen for fiscal 2021. Thereafter, revenue is expected to reach 30.542 billion yen in 2021, mainly due to of the recovery in all segments after the end of the pandemic. Additionally, the EPS figure is expected to improve to ¥743.24, which together with the P/E multiple of 21.8x and a yen to dollar exchange rate of $0.01 will lead to a valuation from Toyota Motor about $150.
[Updated 06/26/2020] Looks like Toyota’s stock has reached the end of the road after its recent rally
Toyota Motor Stock (NYSE: TM) has rebounded more than 15% since its drop to $111 on March 23 to reach its current level of around $126. Notably, this compares to the 36% growth of the S&P 500 over the same period. We believe that Toyota now has limited upside potential. The key is that the company’s shares are up 12% from the end of fiscal 2019 (fiscal year ends March).
Part of this uptick in the past two years is helped by Toyota Motor’s revenue increase of about 5% from fiscal 2018 to fiscal 2020, but offset by the net profit margin, which increased from 8 .5% in 2018 to 6.9% in 2020. Earnings growth, per share, was lower at -9.8%, slightly offset by share buybacks. Specifically, the company invested about $12 billion in buyouts from 2018 to 2020, which resulted in a roughly 5% decline in shares outstanding. Although Toyota Motor had approximately $39 billion in cash at last report, we believe it will likely be difficult for the company to sustain this level of buybacks until the coronavirus pandemic situation becomes clear. .
Finally, Toyota’s P/E ratio fell from around 8x at the end of fiscal 2018 to 9x at the end of fiscal 2020 and has remained at this level for the past few months. In the current situation, the increase in Toyota’s multiple is limited compared to the levels observed in recent years.
Effect of coronavirus
The global spread of the coronavirus has led to lockdowns in various cities around the world, which has affected industrial and economic activity. This is likely to negatively affect consumption and consumer spending. More than 35% of Toyota’s total revenue comes from the United States region, which is hardest hit by the outbreak. Lower consumer spending and consumption would lead to lower demand for automobiles. These factors are sure to hurt Toyota’s revenue. We believe that Toyota’s results in the first quarter of 2021 will confirm the revenue trend, as the Americas and Europe will show negative growth. It is also likely to accompany a clearer Q2 as well as a forecast for FY21.
The actual recovery and its timing depend on the broader containment of the spread of the coronavirus. Our Dashboard Trends in Covid-19 cases in the United States provides insight into the spread of the pandemic in the United States and contrasts with trends in Brazil and Russia. With investors focusing their attention on 2021 results, valuations become important to finding value.
What if you were looking for a more balanced portfolio instead? here is a quality portfolio which has consistently beaten the market since late 2016.
Invest with Trefis Wallets that beat the market
See everything Trefis Price estimates