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Toyota Motor Corporation (TM - Free Report) , a Zacks Rank #1 (Strong Buy), manufactures and sells passenger vehicles, minivans, commercial vehicles, and related parts and accessories. One of the leading global automakers in terms of sales and production, Toyota continues to experience strong demand for its robust lineup of vehicles.
The stock has responded in kind, breaking out to an all-time high in 2024. TM shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Automotive – Foreign industry group, which currently ranks in the top 23% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This group is widely outperforming the market so far this year:
Image Source: Zacks Investment Research
In addition, note the favorable characteristics for this industry:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Based out of Japan, Toyota’s product portfolio consists of a full range of models. Its automotive business caters to its domestic market as well as markets in North America, Europe, Asia, and the Middle East. The company has several manufacturing facilities across the globe that produce popular vehicle brands including Lexus, Toyota, Scion, Hino, and Daihatsu.
A durable lineup of trucks and sport utility vehicles are set to drive sales volumes. The company’s electric vehicle (EV) push also represents a major tailwind. The Japanese auto giant aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. Toyota plans to invest $37 billion in EVs through the end of this decade.
Furthermore, Toyota provides financial services such as retail financing and leasing, wholesale financing, insurance, and credit cards. The company also operates GAZOO.com, a web portal for automobile information.
Earnings Trends and Future Estimates
Toyota has established an impressive earnings history, beating estimates in each of the last four quarters. Most recently, the company reported fiscal third-quarter earnings of $6.81/share, an 86.07% surprise over the $3.66/share consensus estimate.
Toyota delivered a trailing four-quarter average earnings surprise of 67.6%. Consistently beating earnings estimates is a recipe for success.
Analysts covering TM are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts bumped up earnings estimates by 15.7% in the past 60 days. The Zacks Consensus Estimate now stands at $23.06/share, reflecting potential growth of 73.6% relative to the prior year. Revenues are projected to have risen 10% to $302.2 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TM shares advanced more than 75% over the last year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs and recently surpassed its former all-time high. With both strong fundamental and technical indicators, Toyota is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Toyota has recently witnessed positive revisions. As long as this trend remains intact (and TM continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Toyota repurchased 28 million shares in its fiscal third quarter and increased its dividend 5 times over the past 5 years. The company’s commitment to maximize shareholder value is another compelling reason to consider investing in TM stock.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why Toyota is an appealing investment. An attractive technical trend along with robust fundamentals paint a bullish picture moving forward.
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Bull of the Day: Toyota Motor Corp. (TM)
Toyota Motor Corporation (TM - Free Report) , a Zacks Rank #1 (Strong Buy), manufactures and sells passenger vehicles, minivans, commercial vehicles, and related parts and accessories. One of the leading global automakers in terms of sales and production, Toyota continues to experience strong demand for its robust lineup of vehicles.
The stock has responded in kind, breaking out to an all-time high in 2024. TM shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Automotive – Foreign industry group, which currently ranks in the top 23% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This group is widely outperforming the market so far this year:
Image Source: Zacks Investment Research
In addition, note the favorable characteristics for this industry:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Based out of Japan, Toyota’s product portfolio consists of a full range of models. Its automotive business caters to its domestic market as well as markets in North America, Europe, Asia, and the Middle East. The company has several manufacturing facilities across the globe that produce popular vehicle brands including Lexus, Toyota, Scion, Hino, and Daihatsu.
A durable lineup of trucks and sport utility vehicles are set to drive sales volumes. The company’s electric vehicle (EV) push also represents a major tailwind. The Japanese auto giant aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. Toyota plans to invest $37 billion in EVs through the end of this decade.
Furthermore, Toyota provides financial services such as retail financing and leasing, wholesale financing, insurance, and credit cards. The company also operates GAZOO.com, a web portal for automobile information.
Earnings Trends and Future Estimates
Toyota has established an impressive earnings history, beating estimates in each of the last four quarters. Most recently, the company reported fiscal third-quarter earnings of $6.81/share, an 86.07% surprise over the $3.66/share consensus estimate.
Toyota delivered a trailing four-quarter average earnings surprise of 67.6%. Consistently beating earnings estimates is a recipe for success.
Analysts covering TM are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts bumped up earnings estimates by 15.7% in the past 60 days. The Zacks Consensus Estimate now stands at $23.06/share, reflecting potential growth of 73.6% relative to the prior year. Revenues are projected to have risen 10% to $302.2 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TM shares advanced more than 75% over the last year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs and recently surpassed its former all-time high. With both strong fundamental and technical indicators, Toyota is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Toyota has recently witnessed positive revisions. As long as this trend remains intact (and TM continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Toyota repurchased 28 million shares in its fiscal third quarter and increased its dividend 5 times over the past 5 years. The company’s commitment to maximize shareholder value is another compelling reason to consider investing in TM stock.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why Toyota is an appealing investment. An attractive technical trend along with robust fundamentals paint a bullish picture moving forward.