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Toyota (TM) Q4 Earnings to Suffer From Chip Crisis & Cost Woes

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Toyota (TM - Free Report) is set to release fourth-quarter fiscal 2022 results on May 11. The Zacks Consensus Estimate for earnings is pegged at $2.40 per share on revenues of $68.20 billion. The Japan auto giant delivered higher-than-anticipated earnings in the last reported quarter on better-than-expected revenues.The bottom line, however, declined from the year-ago earnings.

The Zacks Consensus Estimate for Toyota’s fiscal fourth-quarter earnings per share has been revised downward by 46 cents in the past 60 days. The bottom-line projection implies a year-over-year fall of 53.7%. The Zacks Consensus Estimate for quarterly revenues also suggests a year-over-year decline of around 6%.

Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being 41.84%. 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

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 on 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 carries a Zacks Rank of 4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

Toyota’s fiscal fourth-quarter results will reflect the impact of declining vehicle sales in Japan, the United States, Europe and China. High commodity costs, a tough labor market and logistical challenges would have also played spoilsport.

For the quarter under discussion, Toyota’s vehicle sales (excluding Daihatsu and Hino) in Japan totaled 375,871 units, down 17.6% on a year-over-year basis. March represented the 7th consecutive month of year over year decline in sales volumes.

Toyota’s vehicle sales in the United States totaled 514,592 units, down 14.7% year over year. The sales decline was even more glaring for the month of March as chip concerns were compounded by the Russia-Ukraine war and rising coronavirus cases in China. Sales of the namesake brand and Lexus division plunged 22.6% and 29.1%, respectively, year over year in March itself.

Sales in Europe totaled 284,506 units in the January-March quarter, inching down 1% from the comparable year-ago period.  Sales of the Toyota brand edged up 1% year over year to 270,913 units in the to-be-reported quarter. The Lexus division, however, bore the brunt of severe supply chain disruptions, with volumes declining 29% year on year to 13,593 vehicles. For the March-end quarter, Toyota’s vehicle sales slid 6.1% year over year in China but edged up 0.4% in March.

Additionally, the company’s elevated capital expenditure on advanced technologies and alternative fuels to develop electric and autonomous vehicles might have further limited the fiscal fourth-quarter margins.

What Awaits Honda?

Toyota’s closest peer Honda (HMC - Free Report) is also set to report fiscal fourth-quarter 2022 results on May 13. Our model does not conclusively predict an earnings beat for Honda. This is because the company doesn’t possess the right combination of a positive ESP and a favorable Zacks Rank.

Honda has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 57 cents a share, indicating a decline of 51.3% year over year. The top-line projection of 33.2 billion implies a year-over-year contraction of 3%. Over the trailing four quarters, HMC topped earnings estimates on all occasions, with the average surprise being 66.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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