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Analyst Blog

On Jun 26, 2014, we issued an updated research report on Toyota Motor Corporation (TM - Analyst Report).

The automaker posted consolidated net income of ¥1.82 trillion ($17.7 billion) for fourth-quarter fiscal 2014 (ending Mar 31, 2014), surging from ¥962.1 billion ($10.5 billion) in the year-ago quarter. Consolidated revenues in the quarter escalated 12.6% year over year to ¥6.57 trillion ($63.8 billion). Unit sales augmented 4.1% to 2.33 million units.

There are numerous factors working in favor of Toyota, including its leading position in terms of global vehicle sales, rising cash flows, increased focus on product development, efforts to increase capacity, expansion in the emerging markets and the new share repurchase program. Moreover, Toyota plays a pivotal role in the global market for environment-friendly vehicles.

However, Toyota’s weak fiscal 2015 guidance and a string of product recalls are headwinds.The automaker’s net earnings are expected to drop 2.4% to ¥1.78 trillion ($17.8 billion) or ¥$561.56 ($5.62) per share in fiscal 2015. Consolidated vehicle sales are also expected to fall to 9.10 million units from 9.12 million in fiscal 2014. Consolidated revenues are estimated to be ¥25.7 trillion ($257 billion), in line with fiscal 2014.

The Zacks Consensus Estimate for Toyota’s fiscal 2015 earnings per share is $11.91, which implies a 5.21% increase from fiscal 2014.

Toyota currently carries a Zacks Rank #4 (Sell).

Other Stocks to Consider

Some better-ranked automobile stocks worth considering include Fox Factory Holding Corp (FOXF - Snapshot Report), Gentherm Incorporated (THRM - Snapshot Report) and Tower International, Inc. (TOWR - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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