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The Zacks Analyst Blog Highlights Toyota, Honda and Nissan
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For Immediate Release
Chicago, IL – October 1, 2026 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Toyota (TM - Free Report) , Honda (HMC - Free Report) and Nissan (NSANY - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Toyota's China Problem: Is TM Stock a Buy, Hold or Sell?
Japan’s leading automaker Toyota’s latest monthly figures show that the company is facing pressure in the world’s biggest vehicle market— China.
Toyota's global sales (including Lexus) declined 7.5% year over year to 832,618 vehicles in August, the seventh straight monthly decline. China was the main reason. Sales in China dropped 22.8% to 118,449 units as demand for petrol and hybrid cars stayed weak, with higher fuel prices due to the Middle East conflict adding to the strain. Overseas sales as a whole fell 8.9%, the seventh consecutive monthly drop.
Production followed the same direction. Global output declined 5.9% to 700,860 vehicles, partly because some countries had fewer working days. At home, output slipped 1.7% to 204,487 units after July's 7.1-magnitude Kumamoto earthquake and a run of typhoons that disrupted factories. With that, Toyota's production in Japan snapped three months of year-over-year gains. In China, production fell 11.3%.
Toyota’s close peers Honda and Nissan reported much steeper production declines in August in China. While Honda’s output tanked 71.7% to 14,130 units, Nissan’s production slumped 73.3% in the country.
Japan and Europe Gain, US and Middle East Lag
In Japan, Toyota’s sales rose 9.1% to 105,067 units, the fifth straight monthly increase, driven by new models such as the RAV4, the bZ4X and the Land Cruiser FJ. Sales in Europe grew 2.6% to 78,527 vehicles last month, while the United States dipped 4.4% to 215,556 units.
The Middle East suffered the most, with sales down 37.5%. Yet exports from Japan to the region rose 31% to 24,411 vehicles, the second monthly gain in a row, which hints that the worst of the disruption may be passing.
Meanwhile, electrified vehicles held up well, with worldwide sales up 5.3% to about 3.09 million units, reinforcing the demand for Toyota's hybrid-heavy lineup.
So where does this leave TM stock? China is clearly a problem, but that's only part of the story. Let's see how Toyota's strengths stack up against its weak spots.
What's Working in Toyota's Favor
Hybrids are the core of Toyota's strategy, and they are working. Hybrid sales rose 6.7% in the first quarter of fiscal 2027 to 1.24 million units. Electrified vehicles now make up more than half of Toyota and Lexus sales. The company expects hybrid sales to rise to 5.09 million units in fiscal 2027 from 4.62 million in fiscal 2026 and plans further capacity expansion toward 2030.
Toyota also earns money beyond selling cars. Its financial services arm’s operating income grew 24% to ¥275.7 billion in the last reported quarter, giving the group a steadier stream of profit that does not depend on factory output.
Shareholders are being rewarded too. Toyota has authorized buybacks of up to ¥1 trillion, plans to cancel 200 million treasury shares and has lifted its dividend outlook to ¥100 per share. The stock yields about 3%. It also looks inexpensive, trading at roughly 8.53 times forward earnings, below the industry’s 9.54 and the stock’s own 5-year average of 9.06.
Reasons for Caution
The biggest concern is profit. Toyota expects revenues to rise to ¥54 trillion this fiscal year from ¥50.68 trillion, but operating income to fall 9.7% to ¥3.4 trillion. Higher labor costs, depreciation and research spending are eating into margins. China adds to the strain, since Toyota is spending more on promotions to defend its share in a sluggish market.
The balance sheet is another watch point. Long-term debt rose to ¥26.08 trillion as of June 30, 2026. The company's forecast also leaves out the impact of the Kumamoto earthquake, and the Middle East remains unpredictable.
Toyota has a Growth and Momentum Score of D each, which suggests the market is not yet convinced a recovery is close.
Zacks Consensus Estimate for Toyota
The Zacks Consensus Estimate for TM’s fiscal 2027 and 2028 revenues implies a year-over-year increase of 0.8% and a year-over-year decline of 2.4%, respectively. The consensus mark for the company’s fiscal 2027 and 2028 EPS calls for a year-over-year uptick of 3.8% and 15%, respectively.
See how the consensus estimates for EPS have been revised over the past 90 days.
Our Take
Toyota's China problem is real but strong hybrid demand, steady financing income, generous buybacks and a low valuation give it a solid cushion. Still, shrinking profit guidance, rising debt and weak momentum leave little reason to rush in. With earnings expected to recover only gradually, TM looks like a stock to hold, not chase. Existing investors can stay put, while new buyers should wait for a better entry point or clearer signs of stabilization.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Toyota, Honda and Nissan
For Immediate Release
Chicago, IL – October 1, 2026 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Toyota (TM - Free Report) , Honda (HMC - Free Report) and Nissan (NSANY - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Toyota's China Problem: Is TM Stock a Buy, Hold or Sell?
Japan’s leading automaker Toyota’s latest monthly figures show that the company is facing pressure in the world’s biggest vehicle market— China.
Toyota's global sales (including Lexus) declined 7.5% year over year to 832,618 vehicles in August, the seventh straight monthly decline. China was the main reason. Sales in China dropped 22.8% to 118,449 units as demand for petrol and hybrid cars stayed weak, with higher fuel prices due to the Middle East conflict adding to the strain. Overseas sales as a whole fell 8.9%, the seventh consecutive monthly drop.
Production followed the same direction. Global output declined 5.9% to 700,860 vehicles, partly because some countries had fewer working days. At home, output slipped 1.7% to 204,487 units after July's 7.1-magnitude Kumamoto earthquake and a run of typhoons that disrupted factories. With that, Toyota's production in Japan snapped three months of year-over-year gains. In China, production fell 11.3%.
Toyota’s close peers Honda and Nissan reported much steeper production declines in August in China. While Honda’s output tanked 71.7% to 14,130 units, Nissan’s production slumped 73.3% in the country.
Japan and Europe Gain, US and Middle East Lag
In Japan, Toyota’s sales rose 9.1% to 105,067 units, the fifth straight monthly increase, driven by new models such as the RAV4, the bZ4X and the Land Cruiser FJ. Sales in Europe grew 2.6% to 78,527 vehicles last month, while the United States dipped 4.4% to 215,556 units.
The Middle East suffered the most, with sales down 37.5%. Yet exports from Japan to the region rose 31% to 24,411 vehicles, the second monthly gain in a row, which hints that the worst of the disruption may be passing.
Meanwhile, electrified vehicles held up well, with worldwide sales up 5.3% to about 3.09 million units, reinforcing the demand for Toyota's hybrid-heavy lineup.
So where does this leave TM stock? China is clearly a problem, but that's only part of the story. Let's see how Toyota's strengths stack up against its weak spots.
What's Working in Toyota's Favor
Hybrids are the core of Toyota's strategy, and they are working. Hybrid sales rose 6.7% in the first quarter of fiscal 2027 to 1.24 million units. Electrified vehicles now make up more than half of Toyota and Lexus sales. The company expects hybrid sales to rise to 5.09 million units in fiscal 2027 from 4.62 million in fiscal 2026 and plans further capacity expansion toward 2030.
Toyota also earns money beyond selling cars. Its financial services arm’s operating income grew 24% to ¥275.7 billion in the last reported quarter, giving the group a steadier stream of profit that does not depend on factory output.
Shareholders are being rewarded too. Toyota has authorized buybacks of up to ¥1 trillion, plans to cancel 200 million treasury shares and has lifted its dividend outlook to ¥100 per share. The stock yields about 3%. It also looks inexpensive, trading at roughly 8.53 times forward earnings, below the industry’s 9.54 and the stock’s own 5-year average of 9.06.
Reasons for Caution
The biggest concern is profit. Toyota expects revenues to rise to ¥54 trillion this fiscal year from ¥50.68 trillion, but operating income to fall 9.7% to ¥3.4 trillion. Higher labor costs, depreciation and research spending are eating into margins. China adds to the strain, since Toyota is spending more on promotions to defend its share in a sluggish market.
The balance sheet is another watch point. Long-term debt rose to ¥26.08 trillion as of June 30, 2026. The company's forecast also leaves out the impact of the Kumamoto earthquake, and the Middle East remains unpredictable.
Toyota has a Growth and Momentum Score of D each, which suggests the market is not yet convinced a recovery is close.
Zacks Consensus Estimate for Toyota
The Zacks Consensus Estimate for TM’s fiscal 2027 and 2028 revenues implies a year-over-year increase of 0.8% and a year-over-year decline of 2.4%, respectively. The consensus mark for the company’s fiscal 2027 and 2028 EPS calls for a year-over-year uptick of 3.8% and 15%, respectively.
See how the consensus estimates for EPS have been revised over the past 90 days.
Our Take
Toyota's China problem is real but strong hybrid demand, steady financing income, generous buybacks and a low valuation give it a solid cushion. Still, shrinking profit guidance, rising debt and weak momentum leave little reason to rush in. With earnings expected to recover only gradually, TM looks like a stock to hold, not chase. Existing investors can stay put, while new buyers should wait for a better entry point or clearer signs of stabilization.
Toyota currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Get all the details here >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.