Toyota Sales Remain Strong; Weak Fiscal Guidance a Drag
On Sep 18, 2014, we issued an updated research report on Toyota Motor Corporation (TM).
Toyota recorded earnings of ¥185.34 per share ($3.64 per ADR) in first-quarter fiscal 2015 (ending Jun 30, 2014), higher than ¥177.32 per share ($3.58 per ADR) in first-quarter fiscal 2014 (ending Jun 30, 2013). Earnings per ADR surpassed the Zacks Consensus Estimate of $3.07. The Japanese automaker posted consolidated net income of ¥587.8 billion ($5.76 billion) for first-quarter fiscal 2015, improving from ¥562.2 billion ($5.68 billion) in the year-ago quarter.
Consolidated revenues in the quarter increased 2.2% year over year to ¥6.39 trillion ($62.65 billion). However, the figure missed the Zacks Consensus Estimate of $62.87 billion.
In the first half of 2014, Toyota sold 5.1 million vehicles globally, beating all other automakers to become the largest selling automaker. The company is banking on emerging markets, including Asia, for its sales growth. By fiscal 2015, the company plans to introduce eight compact car models in the developing economies like Brazil, China, India and Indonesia.
However, the weak fiscal 2015 guidance and a string of product recalls are some of the headwinds for this stock. Toyota’s net earnings are expected to fall 2.4% to ¥1.78 trillion ($17.6 billion) or ¥$561.54 per share ($11.12 per ADR) in fiscal 2015. Consolidated vehicle sales for fiscal 2015 are likely to be about 9.10 million units, down from 9.12 million in fiscal 2014. Consolidated revenues are estimated to be ¥25.7 trillion ($254.5 billion), in line with fiscal 2014.
Toyota is among the automakers that reduced car parts prices in China following the National and Development Reform Commission’s (:NDRC) antitrust probe in the auto industry. On an average, the price of the spare parts will be reduced by 26%. This will dent the company’s revenues.
Currently, Toyota carries a Zacks Rank #3 (Hold). Better-ranked auto stocks worth considering in the same sector include Tesla Motors, Inc. (TSLA), Nissan Motor Co. Ltd. (NSANY) and Tata Motors Limited (TTM). All these stocks have a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on TM
Read the Full Research Report on NSANY
Read the Full Research Report on TTM
Read the Full Research Report on TSLA
Zacks Investment Research
