Will Toyota Motors’ stock slow down?

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[Updated 09/15/2021] Toyota Engines Update

Toyota Motors stock (NYSE: TM) has been around the current range since June 2021 without a small dip in mid-August. The company has handled the global chip shortage better than its peers. This was demonstrated by the fact that Toyota Motors overtook General Motors sales in the United States for the first time by reporting a sales volume of 688,813 compared to 688,236 for GM in the April-June quarter. The previous week, the company said it would invest $ 13.6 billion in battery technology over the next decade, including a $ 9 billion investment in production. This indicates that the company is taking the addition of electric cars to its lineup seriously.

We don’t expect much change in revenues or profits over the next couple of years due to the investment in battery technology. We are waiting Toyota Motors revenue increase 7.1% to 29.1 trillion yen ($ 269.9 billion). In addition, its net profit is expected to reach 2.9 trillion yen ($ 27 billion), which will bring EPS to 1,043.37 yen ($ 19.32) for fiscal year 2022. For fiscal year 2023, we predict that revenues will rise to 29.9 trillion yen (277.3 billion yen) and net income will rise to 3.1 trillion yen ($ 28.4 billion). This will bring EPS to ¥ 1,095.85 ($ 20.29) for fiscal 2023, which together with the P / E multiple of 18.3x and a yen / dollar exchange rate of $ 0.00926 will lead to Toyota Motors Rating around $ 186, which implies a hike of more than 5%.

[Updated 06/23/2021] Will Toyota shares continue to rally for future growth?

Toyota Motors stock (NYSE: TM) has gained 56% since fiscal 2019 end (ended March 2019) and 14.6% since fiscal 2021 end (ended March 2021) to currently hit $ 63. The share has been steadily increasing since fiscal 2021 results (ended March 2021) in May 2021. For fiscal 2021, the company recorded an 11% year-over-year decline in revenue to 272 Trillion yen ($ 256.5 billion) while profits improved mainly due to higher interest and dividends. returned to 802.23 ($ 7.56) per share. The stock grew as the recovery continued into the fourth quarter of fiscal 2021, where revenue grew 8.3% year-over-year to 768.9 trillion yen ($ 71 billion). Sales volume also recovered and increased 5% year-on-year for the fourth quarter of fiscal 2021.

We expect the momentum to continue into FY2022 (fiscal year ends March 2022), and Toyota Motors’ revenue will grow 7.1% to 29.1 trillion yen (269.9 billion yen). of dollars). In addition, its net profit is expected to reach 2.9 trillion yen ($ 27 billion), which will bring EPS to 1043.37 yen for fiscal 2022, which together with the P / E multiple of 18.8x and a yen / dollar exchange rate of $ 0.00926, leads to a valuation of Toyota Motors around $ 190, which implies a rise of more than 10%.

[Updated 11/19/2020] Toyota Engines Update

Having gained more than 28% since the lows of March 23, Toyota Motors stock (NYSE: TM) is only 5% higher. TM stock fell $ 111 to $ 142 from the recent low against the S&P 500 which moved 60%. The company has seen a steady increase in revenue over the past few years and its P / E multiple has increased. We believe the stock, after the recent rally, is close to its short-term potential.

Due to the Covid-19 crisis, Toyota Motors, one of the world’s largest automakers, saw its turnover fall by 26% in the first six months of the year compared to the same period of the previous year. In the second quarter of 2021 (ended September 2020), Toyota reported profit of 225.21 yen while total revenue was recorded at 6,774 billion yen, down 11% year-on-year. In addition, the company reported 1.290 billion yen of cash inflows from operating activities for the first six months.

We expect Toyota Motors’ revenue to remain stable at around 29.930 billion yen in fiscal 2021 (fiscal year ends in March). In addition, its net profit is expected to decline 5% year-on-year, reducing EPS to 723.27 for fiscal 2021. Subsequently, revenue is expected to reach 30.542 billion yen in 2021, mainly due to the recovery in all segments after the end of the pandemic. In addition, the EPS figure is expected to improve to ¥ 743.24 which together with the P / E multiple of 21.8x and a yen / dollar exchange rate of $ 0.01 will lead to a valuation of Toyota Motors of about $ 150.

[Updated 06/26/2020] Looks like Toyota Stock has reached the end of the road after its recent rally

Toyota Motors (NYSE: TM) stock has rebounded more than 15% from falling to $ 111 on March 23 to its current level of around $ 126. Notably, this compares to the 36% growth of the S&P 500 over the same period. We believe Toyota now has limited upside potential. The key is that the company’s stock is 12% higher than at the end of fiscal 2019 (fiscal year ends in March).

Part of this increase over the past two years is helped by Toyota Motors’ revenue increase of approximately 5% from fiscal 2018 to fiscal 2020, but offset by the net revenue margin, which increased from 8 , 5% in 2018 to 6.9% in 2020. Earnings growth, per share, was less than -9.8%, slightly offset by share buybacks. Specifically, the company invested roughly $ 12 billion in buybacks from 2018 to 2020, which resulted in an approximately 5% drop in outstanding shares. With Toyota Motors having around $ 39 billion in cash at the last report, we believe it will likely be difficult for the company to maintain this level of buybacks until the coronavirus pandemic situation becomes clear.

Finally, Toyota’s P / E ratio fell from around 8x at the end of fiscal 2018 to 9x at the end of fiscal 2020 and has remained at that level for the past several months. In the current situation, the increase in Toyota’s multiple is limited compared to levels seen in recent years.

Coronavirus effect

The global spread of the coronavirus has resulted in lockdowns in various cities around the world, affecting industrial and economic activity. This is likely to negatively affect consumption and consumer spending. More than 35% of Toyota’s total revenue comes from the region of the United States, which is most affected by the epidemic. Lower consumer spending and consumption would lead to lower demand for automobiles. These factors are doomed to hurt Toyota’s revenue. We believe Toyota’s first quarter 2021 results will confirm the revenue trend as the Americas and Europe show negative growth. It is also likely to accompany a clearer Q2 as well as FY’21 forecasts.

The actual recovery and its timing depend on the wider containment of the spread of the coronavirus. Our dashboard Trends in Covid-19 cases in the United States provides insight into the spread of the pandemic in the United States and contrasts with trends in Brazil and Russia. With investors focusing their attention on the 2021 results, valuations become important in finding value.

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