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Key Factors Shaping the Fate of Toyota's (TM) Q4 Earnings

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Toyota (TM - Free Report) is slated to release fourth-quarter fiscal 2021 results on May 12. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $3.45 per share on revenues of $70.78 billion.

This Japanese auto giant delivered higher-than-anticipated earnings in the last reported quarter on robust contribution from the Automotive and Financial Services segments.
Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being a whopping 1,229.86%.

Trend in Estimate Revisions   

The Zacks Consensus Estimate for Toyota’s fiscal fourth-quarter earnings per share has been revised downward by 10 cents to $3.45 in the past 60 days. Nonetheless, this compares favorably with the year-ago quarter’s earnings of 45 cents per share, indicating a surge of 666.7% year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 8.6%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Toyota this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Toyota has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Toyota, peers of which include Honda (HMC - Free Report) , Nissan Motor (NSANY - Free Report) and Volkswagen AG (VWAGY - Free Report) , currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

Toyota’s expanding portfolio of product lines and a robust line-up of trucks and SUVs, along with its accelerated transition to electric vehicles, is likely to have aided the auto giant’s fiscal fourth-quarter sales in the major markets served.

In fact, the surge in vehicle sales in Japan and outside the nation during the March-end quarter reflects this upside. This, in turn, is likely to have boosted the quarterly top and bottom lines.
For the quarter in discussion, vehicle sales in Japanese market summed 651,537 units, up 6.2% year on year. This upside primarily resulted from robust demand of the new models, including the Harrier and Yaris, in the Japanese market.

Total vehicle sales outside Japan totaled 2,056,733 vehicles during the quarter to be reported, up 20.7% year on year. These increases have been driven primarily by the soaring sales in North America, Europe and China. Importantly, the demand spike for the Corolla, Levin, Avalon, RAV4 and Lexus brand models in the Chinese market, and surging sales of light trucks including the RAV4, Highlander and 4Runner in the North American market contributed to this upswing.

Apart from this, during the month of March, the company witnessed a year-on-year rise in vehicle sales of 83.2%, 30.8% and 63.1% in North America, Europe and China, respectively. This is likely to have boosted the company’s fiscal fourth-quarter margins.

However, the company’s elevated capital expenditure on advanced technologies and alternative fuels for the development of electric and autonomous vehicles might have dented the fiscal fourth-quarter margins. Also, the global shortage in supply of semiconductors across the auto sector is likely to have hurt the firm’s performance.

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