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Key Factors Shaping the Fate of Toyota's (TM) Q1 Earnings

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Toyota (TM - Free Report) is set to release first-quarter fiscal 2022 results on Aug 5. The Zacks Consensus Estimate for earnings is pegged at $4.68 per share on revenues of $68.91 billion.

This Japanese auto giant delivered higher-than-anticipated earnings in the last reported quarter on better-than-expected revenues.  

Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being 92.4%. This is depicted in the graph below:

Toyota Motor Corporation Price and EPS Surprise Toyota Motor Corporation Price and EPS Surprise

Toyota Motor Corporation price-eps-surprise | Toyota Motor Corporation Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Toyota’s fiscal first-quarter earnings per share has been revised upward by $1.25 to $4.68 in the past 30 days. This compares favorably with the year-ago quarter’s earnings of $1.06 per share, indicating a surge of 341.5% year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 61.1%.

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 currently flaunts a Zacks Rank of 1. 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 first-quarter sales in the major markets served.

In fact, the surge in vehicle sales in Japan and outside the nation during the June-end quarter reflects this upside. This, in turn, is anticipated to have boosted the quarterly top and bottom lines.

For the quarter in discussion, vehicle sales in Japanese market summed 513,629 units, up from the 399,691 units sold in the prior-year quarter. This upside primarily resulted from robust demand of the Harrier and Yaris models in the Japanese market.

Total vehicle sales outside Japan totaled 2,245,319 vehicles during the quarter to be reported, up from the 1,447,851 units sold in the prior-year period. These increases have been driven primarily by the sales spike in North America, Europe and China.

For the April-June quarter, Toyota was the bestselling automaker in the United States, beating the perennial market leader General Motors (GM - Free Report) . The Japanese automaker posted sales of 688,813 vehicles, soaring nearly 73% on a yearly basis.

Besides, despite the thinnest of the inventories in the industry, the company’s June sales in the United States surged 39.8% year over year. Robust sales of the three-row Highlander, HEVs and Camry contributed to this upswing. Apart from these, during the month of June, the company witnessed a year-on-year rise in vehicle sales of 24.3% and 4.3% in Europe and China, respectively. This is likely to have boosted the company’s fiscal first-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 first-quarter margins.

Stocks to Consider

Here are a few stocks in the auto sector lined up to release quarterly results soon. Encouragingly, our model predicts earnings beats for these stocks:

Fox Factory Holding Corp. (FOXF - Free Report) has an Earnings ESP of +1.15% and carries a Zacks Rank #2, at present. It is slated to report earnings results on Aug 5.

Lear Corporation (LEA - Free Report) has an Earnings ESP of +3.05% and carries a Zacks Rank of 3, currently. The company is set to announce quarterly figures on Aug 6.

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