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 buying Toyota a wise 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 a worthwhile investment for 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.
Is Toyota a reliable long-term investment?
Toyota Motor Corporation is presently ranked as a Zacks Rank 3 company, and according to Zacks’ proprietary research, we anticipate an in-line return for the company’s shares in the market over the coming several months. The VGM Score for Toyota Motor Corporation is also an A. (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style). The company Toyota Motor Corporation may be undervalued, according to valuation criteria. It would be a good choice for value investors, according to its Value Score of A. The strength of TM’s finances and future growth prospects show how capable it is of outperforming the market. Its growth score right now is C. With a Momentum Score of A, recent price fluctuations and earnings estimate revisions suggest that this company may be a solid choice for momentum investors.
Toyota: 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 purchase Toyota stock?
Toyota Motor Corporate, with its headquarters in Toyota City, Japan, with more than 300,000 employees, is a market leader in the production of automobiles globally. The business creates, produces, assembles, and markets automobiles ranging from minivans to hybrids. Yaris, iQ, Scion xB, Camry, REIZ, Mark X, Premio, Allion, Lexus, Sequoia, 4Runner, Blade, and Avensis are a few of its brands. Because the company owns American Depository Shares (ADS-TOYOTA MTR CP), which enable it to trade on the NYSE as a foreign corporation, purchasing the stock is as simple as purchasing any other US-based company. It is the same as purchasing stock in any other publicly traded US corporation.
Look into Toyota stock. Bring up a graph and the most recent news items. Toyota’s stock ticker is TM (NYSE-TOYOTA MTR CP ADS). Ask your broker for analyst reports if you have one. A link to Yahoo! Finance’s Toyota study can be found under Resources.
Review the ADS’s definition. An ADS is “A U.S. dollar-denominated equity share of a foreign-based corporation eligible for purchase on an American stock exchange,” according to InvestorWords. A bank typically issues ADS shares. These are essentially global stock certificates.
Choose between a traditional broker and an online broker account. Do you require someone to be reachable, or do you prefer a text message? Finding an online brokerage is essential if you want to make a deal at a lower price. Two respectable internet businesses are Ameritrade and E-trade.
You can either request an application or apply online. If you open the account online, you will have to mail or wire money.
Calculate your desired investment in Toyota at the current pricing. Taking into account transaction expenses, if you want to invest $100,000 and Toyota is selling for $100, you could purchase 1000 shares. In other words, divide your desired investment by the Toyota ADS’s current price. This figure represents the approximate number of shares you will buy at the going rate.
Make a purchase order. If you’re making a purchase (buy) order online, follow the on-screen instructions, or call customer service for assistance. You must have the ticker symbol (TM), the number of shares you want to buy, the price you want to pay for the shares, and the date on which you want the order to remain in effect (the “good until” date).
purchase mutual funds Purchasing mutual funds with Toyota ADS holdings is another option to purchase Toyota shares without actively managing it. Fidelity Diversified, Fidelity Overseas Fund, and Fidelity Blue Chip Growth Fund are the largest Toyota shareholders. A sizable portion is also owned by Franklin Templeton VIP TR-Foreign Securities Fund.
Request or print the confirmation detailing the price, the quantity of shares, and the “good until” date.
Is Ford a wise investment at the moment?
The price of Ford shares soared in 2021 and into the new year, but it plunged after the most recent market correction.
Investors should wait to see if Ford stock will maintain above its 10-week line as it builds a new base even though Ford has undeniably broken its downtrend. Despite the positive response to Ford’s earnings, a buy at this point would be dangerous because the stock hasn’t yet developed a solid basis. Additionally, shares are over 10% above the 10-week line, which is a sign of extension.
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