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Toyota's (TM) Cost-Cut Initiatives Aid Q4 Earnings Beat

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Skechers (SKX) Beats Q3 Earnings Estimates

Skechers (SKX) delivered earnings and revenue surprises of 13.73% and -3.13%, respectively, for the quarter ended September 2018. Do the numbers hold clues to what lies ahead for the stock?

Toyota Motor Corporation’s TM earnings were $3 per ADR in fourth-quarter fiscal 2018 (ended Mar 31, 2018). Earnings surpassed the Zacks Consensus Estimate of $2.61. The consolidated net income was ¥2.5 trillion ($22.5 billion) in fiscal 2018-end compared with ¥1.83 trillion ($16.9 billion) in the prior year. The Japanese automaker’s cost-reduction initiatives and currency fluctuations contributed to year-over-year growth.

The company’s net revenues increased 1.9% year over year to ¥7.58 trillion ($68.3 billion) in fourth-quarter fiscal 2018. The Zacks Consensus Estimate was $40.55 billion. Consolidated revenues at fiscal 2018-end rose 6% year over year to ¥29.4 trillion ($268 billion).

Toyota Motor Corporation Price, Consensus and EPS Surprise

Toyota Motor Corporation Price, Consensus and EPS Surprise | Toyota Motor Corporation Quote

 

Segment Results

All figures mentioned below are U.S. GAAP-based.

The Automotive segment’s net revenues rose to ¥26.4 trillion ($237.8 billion) in fiscal 2018 in comparison with ¥25.1 trillion ($232.4 billion) in fiscal 2017, while operating income increased to ¥2.01 trillion ($18.1 billion) from the year-ago figure of ¥1.7 trillion ($15.7 billion). The rise in operating income was primarily due to the company’s cost-reduction initiatives and the change in exchange rates.

The Financial Services segment’s net revenues rose to ¥2.02 trillion ($18.2 billion) in the fiscal under review as compared with ¥1.8 trillion ($16.7 billion) in the prior-year period, while operating income surged to ¥285.5 billion ($2.57 billion) from the year-earlier figure of ¥222.4 billion ($2.06 billion). The gain in operating income was primarily due to the boost in financing volume, and decline in expenses associated with credit losses and residual value losses in sales finance subsidiaries.

All Other businesses’ net segmental revenues rose to ¥1.65 trillion ($14.9 billion) in the fiscal under discussion compared with ¥1.32 trillion ($12.2 billion) in the last year, while operating income augmented to ¥101 billion ($909.9 million) from the year-ago tally of ¥81.3 billion ($752.8 million).

Financial Position

Toyota had cash and cash equivalents of ¥3.05 trillion ($27.5 billion) as of Mar 31, 2018, compared with ¥3 trillion ($27.8 billion) as of Mar 31, 2017. Long-term debt amounted to ¥9.91 trillion ($89.3 billion) as of Mar 31, 2018, compared with ¥10 trillion ($92.6 billion) as of Mar 31, 2017.

Consolidated operating cash flow was ¥4.21 trillion ($38 billion) compared with ¥3.41 trillion ($31.6 billion) registered in the same period last year.

Dividend

On May 9, Toyota announced that its board has approved a dividend payment of ¥120 per common share for the current fiscal-end. Including this and the interim dividend of ¥100, annual dividend paid during fiscal 2018 was ¥220 per share. 

Also, the company announced repurchasing 55 million of company’s common shares for up to ¥300 billion.

Fiscal 2019 Guidance

Toyota expects its total retail-unit vehicle sales for fiscal 2019 at roughly 8.95 million compared with the 8.96 million in fiscal 2018.

The company projects its net revenues at ¥29 trillion ($276.2 billion) for fiscal 2019, thus reflecting a 1.3% decline over fiscal 2018. Also, it anticipates its operating income at ¥2.3 trillion ($21.9 billion), a 4.2% slump from the previous fiscal. Further, net income is anticipated to be ¥2.12 trillion ($20.2 billion), a 15% decrease from fiscal 2018.

Zacks Rank & Stocks to Consider

Toyota carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the auto space are Gentex Corporation GNTX, Oshkosh Corporation OSK and Ferrari N.V. RACE. Gentex and Oshkosh sports a Zacks Rank #1 (Strong Buy) while Ferrari carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gentex has expected long-term growth rate of 9.7%. In a year’s time, shares of the company have gained 13.3%.

Oshkosh has expected long-term growth rate of 18.6%. Shares of the company have risen 9.8% over the past year.

Ferrari has expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 62.8%.

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