One of the complaints leveled at Toyota is that it has been reluctant to transition to electric vehicles (EVs), as opposed to other heritage automakers like Ford Motor Company (F) or even Volkswagen AG (OTCPK:VWAGY), which have gone “all in.” Many people, including Toyota management, who seems to have miscalculated customer demand and accelerated penetration globally, were probably taken aback by the momentum that EV leader Tesla, Inc. (TSLA) grabbed during the past ten years.
The company’s most recent rhetoric, however, has been a more determined effort to generate 3.5 million electric vehicles annually by 2030 while turning the Lexus brand entirely EV. Having said that, we think it is important to continue providing the ICE (internal combustion engine) industry with vehicles that are reliable and cheap for a variety of markets, notwithstanding environmental concerns. Toyota’s hybrids are known as a fuel-efficient option by self-charging a smaller internal battery based on regenerative braking together with a small engine, which can serve as a compromise for certain customers who are hesitant to quickly make the switch to a fully electric vehicle.
According to our assessment, Toyota’s gradual shift to EVs while continuing to maintain ICE technology represents a growth opportunity. Given Toyota’s operating margin of 10.4% over the past year compared to the group average, the effort has resulted in overall stronger profitability when compared to a peer group that includes Honda Motor Co., Ltd. (HMC), General Motors Company (GM), Nissan Motor Co., Ltd. (OTCPK:NSANY), Volkswagen AG, and Ford.
All automakers have experienced supply chain issues, but Toyota production numbers have held up better than those of other producers who have experienced more severe output decreases, particularly in the past year. Given that Toyota’s EV to EBITDA ratio is 7.8x as opposed to 6x for Honda, GM, and Ford, or 5x for Ford, the company’s better underlying profitability is reflected in an earnings premium. Given Toyota’s dominance as the top-selling automaker globally, we think the spread is reasonable.
According to the little consensus projections that are now available, Toyota revenues are expected to reach $297 billion for fiscal 2023 “next year,” a 16% rise over the current management guidance for fiscal 2022, which is estimated to be approximately $256 billion at the current FX rate. The consensus is that margins and earnings may increase more quickly in 2023 as supply chain circumstances improve. An implied future P/E of 9.8x and a 1-year ahead P/E of 7.8x are implied by the 2022 EPS prediction at $18.67 and $23.45 for 2023. Given that management’s estimate for this year is on the conservative side, we think there is some upside to this outlook, especially for the top line.
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Is Toyota a reliable investment?
Toyota Motor is a buy for a number of reasons. The draw in this case is the brand name, which enjoys a devoted fan base, which naturally creates a strong demand for any future EV offering with the Toyota or Lexus badge. Even if the corporation hasn’t been a pioneer in battery-powered EVs, given its extensive global infrastructure and manufacturing know-how, its plan to build up in that direction seems plausible. According to this metric, the company continues to have a positive growth outlook and is in a good position to increase its market share globally.
With a price estimate of $235.00 for the next year, which corresponds to a 1-year forward P/E of 10x the current consensus fiscal 2023 EPS, we rank shares of TM as a buy. The chart below shows that since the peak of the pandemic crash in 2020, shares of TM have been closely following a trendline. This pattern should continue, in our opinion, and the most recent decline from the early-January high of $212 signals a fresh window for purchasing.
We are adopting a more upbeat stance in the midst of all the stories about macro concerns, heightened inflation pressures on consumer discretionary spending, and rising interest rates. Nevertheless, there are dangers to think about. The positive case for the stock might be undermined by a worsening of the forecast for global growth while keeping a watch on events in Eastern Europe related to the conflict between Russia and Ukraine. A review of the long-term profits prospects would allow for a leg lower in the stock if the results were less than anticipated and below management guidance. Over the coming quarters, keep an eye on things like production and sales levels, the operating margin, and any changes to the BEV plan.
Is Toyota stock a wise investment in 2022?
One Wall Street analyst analyzing the (NYSE: TM) stock has determined that the stock should be held.
One analyst has given TM a Strong Buy recommendation of 0%, a Buy recommendation of 0%, a Hold recommendation of 100%, a Sell recommendation of 0%, and a Strong Sell recommendation of 0%.
Is a surge in Toyota stock anticipated?
The consensus price target among the 18 analysts that are providing 12-month price projections for Toyota Motor Corp. is 187.78, with a high estimate of 195.98 and a low estimate of 147.77. From the most recent price of 157.81, the median projection reflects a rise of +18.99%.
Analyst Recommendations
The current consensus among the 21 investment analysts surveyed is to buy Toyota Motor Corporation stock. Since August, when it remained unchanged from a Buy rating, this rating has been stable. Mouse over the previous months for more information.
Toyota: A reliable dividend stock?
Toyota distributes 25.4% of its earnings to its stockholders. Our indicator for the dividend’s dependability is 0.87 out of a possible 1.0. This suggests a historically dependable dividend payer. Analysts also anticipate a 20.58% increase in the dividend for the current fiscal year.
Why should I buy Toyota?
The Toyota brand has the highest resale value according to Kelley Blue Book. According to KBB, “it’s simple, just produce a fantastic car that makes people’s lives better, charge a fair price for it, and make sure the car is the most comfortable, dependable, and pleasurable car in its category.
Toyota stock: Is it overpriced?
According to GuruFocus Value assessment, the stock of Toyota Motor (NYSE:TM, 30-year Financials) exhibits all the symptoms of being materially overvalued. The stock should be traded at the GuruFocus Value, which is GuruFocus’ assessment of the stock’s fair value. It is determined using previous stock multiples, historical business growth, and analyst projections of future business performance. An expensive stock will likely have a bad future return if its price is much higher than the GF Value Line. On the other hand, its future return will probably be larger if it is far below the GF Value Line. Toyota Motor stock appears to be extremely expensive at its current price of $182.41 per share and market worth of $255 billion. In the graph below, the GF Value for Toyota Motor is displayed.
The long-term return of Toyota Motor’s stock is probably going to be substantially lower than its expected future company growth, which is predicted to gain 0.06% yearly over the next three to five years, because Toyota Motor is significantly overvalued.
Toyota: Is it undervalued?
The P/CF for TM over the last year has ranged from 6.60 to 7.70, with a median of 5.29. These are just a few of the important indicators that contribute to Toyota Motor Corporation’s high Value rating, but they demonstrate how the company is now cheap.
Can I invest in Toyota Motor?
Buy is the general consensus for Toyota Motor. Based on 3 buy ratings, 2 hold ratings, and no sell ratings, the firm has an average rating score of 2.60.
What does Toyota pay for each share?
For the three months that ended in March 2022, Toyota Motor paid $2.27 in dividends per share. For the trailing twelve months (TTM) ending in March 2022, it paid $4.40 in dividends per share.
Is Toyota superior to Ford?
The response is highly debatable. Ford is reportedly the winner, although some reports contend Toyota is more dependable.
For instance, approximately 90% of Ford vehicles received average or higher dependability ratings in Consumer Reports’ annual car reliability survey.
Only the Toyota Prius outperformed the Ford Fusion for Toyota when compared to the Ford vehicles, though.
Toyota is rated as being more reliable than Ford in the J.D. Power Vehicle Reliability Survey. Ford received a pitiful 3 out of 5 for reliability, compared to Toyota’s stellar 5 out of 5.
Going with the J. D. report seems more logical given that Toyota was identified as the manufacturer of vehicles with the longest lifespan in a separate report by Information Handling System (IHS) Automotive.
In addition, numerous Toyota models from the previous ten years, like the Tundra, Camry, and Avalon, are still in use today.
Which is better, Honda or Toyota?
Toyota has more automobiles, better costs, and higher reliability in the categories we looked at, making it the superior brand. When deciding between Honda and Toyota, Honda isn’t a slouch either thanks to its comparable reliability ratings, reasonable prices, and even higher safety ratings.
Is Lexus a Toyota product?
Although it is owned by the Toyota Motor Corporation and has its own headquarters there, the Lexus brand also operates independently.