Back to top

Analyst Blog

Zacks Equity Research

Toyota (TM) Q2 Earnings: Is a Disappointment in Store?

TM JCI WPRT MTOR

Trades from $3

Toyota Motor Corporation (TM - Free Report) is set to report second-quarter (ended Sep 30, 2016) fiscal 2017 results on Nov 8. In the last quarter, the company posted a positive earnings surprise of 44.35%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Toyota expects fiscal 2017 consolidated revenues, operating income and net earnings to decline. This leads to expectations of weak results in the quarter to be reported. The high number of recalls related to the defective Takata airbag inflators may also lead to higher expenses.

From Apr 2016, Toyota changed its corporate structure to increase the efficiency of its work processes, facilitate faster decision making, and fortify functions that devise its objectives and strategies. This restructuring converted it into a product-based organization from a function-based one. Further, the Toyota New Global Architecture (“TNGA”) initiative focuses on improving the product development process and increasing the competitiveness of production sites. Toyota announced a plan to realign its North American manufacturing operations with the TNGA initiative. These efforts should positively impact the company’s earnings.

Earnings Whispers

Our proven model does not conclusively show that Toyota is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for Toyota is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $2.12. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

TOYOTA MOTOR CP Price and EPS Surprise

 

TOYOTA MOTOR CP Price and EPS Surprise | TOYOTA MOTOR CP Quote

Zacks Rank: Toyota carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Johnson Controls International plc (JCI - Free Report) will release fourth-quarter and fiscal 2016 (ended Sep 30, 2016) earnings on Nov 8, 2016. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westport Fuel Systems Inc. (WPRT - Free Report) will post third-quarter 2016 results on Nov 9, 2016. The company has a Zacks Rank #3 (Hold).

Meritor, Inc. (MTOR - Free Report) – a Zacks Rank #3 stock – will report its fourth-quarter and fiscal 2016 (ended Sep 30, 2016) financial numbers on Nov 16.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>