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Toyota (TM) Misses Q3 Earnings Estimates, Lowers FY19 View

Zacks Equity Research

Toyota Motor Corporation’s TM earnings were $1.11 per ADR in third-quarter fiscal 2019 (ended Dec 31, 2018). Earnings missed the Zacks Consensus Estimate of $2.80. This Japanese automaker reported net income of ¥180.9 billion ($1.6 billion) in the quarter under review, down from ¥942 billion ($8.3 billion) in the year-ago period.

Toyota’s total net revenues rose 3% year over year to $69.04 billion (¥7.8 trillion), which surpassed the Zacks Consensus Estimate of $68.2 billion.

In the first nine months of fiscal 2019, consolidated vehicle sales went up to 6,700,902 units, marking an increase of 22,623 units from the same period of the last fiscal year. Over the same period, this Japanese automaker witnessed a decline in vehicle sales across North America and Other regions (consisting Central and South America, Oceania, Africa, and the Middle East). However, sales in Japan, Europe and Asia rose from the year-ago period.

Toyota Motor Corporation Price, Consensus and EPS Surprise

 

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

Segmental Results

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

The Automotive segment’s net revenues rose to ¥7.02 trillion ($62.1 billion) in third-quarter fiscal 2019 from ¥6.9 trillion ($60.7 billion) in the prior-year quarter. Operating income increased to ¥581.3 billion ($5.14 billion) from the year-ago figure of ¥569 billion ($5 billion).

The Financial Services segment’s net revenues rose to ¥552.4 billion ($4.9 billion) in the quarter under review from ¥512.5 billion ($4.5 billion) in the prior-year period. The segment’s operating income was ¥ 82.6 billion ($730 million), similar to the same period of the last fiscal year.

All Other businesses’ net revenues increased to ¥391.2 billion ($3.4 billion) in the quarter under review from ¥381 billion ($3.37 billion) in the last fiscal year. However, operating income decreased to ¥13.9 billion ($123 million) from the year-ago figure of ¥24.7 billion ($218.6 million).

Financial Position

Toyota had cash and cash equivalents of ¥3.2 trillion ($28 billion) as of Dec 31, 2018, compared with ¥3.1 trillion ($27.5 billion) as of Mar 31, 2018. Long-term debt amounted to ¥10.4 trillion ($92.3 billion) as of Dec 31, 2018, compared with ¥10 trillion ($90 billion) as of Mar 31, 2018.

At the end of the first nine months of fiscal 2019, operating cash flow was ¥2.9 trillion ($25.8 billion) almost similar to the same period of fiscal 2018.

Fiscal 2019 Guidance

This Japanese automaker updated the guidance for fiscal 2019. It expects consolidated vehicle sales of 8.95 million units compared with 8.9 million units mentioned earlier. The company projects net revenues of ¥29.5 trillion ($268.2 billion) and operating income of ¥2.4 trillion ($21.8 billion). Further, net income is anticipated to be ¥1.87 trillion ($17 billion), marking a decline from the previous projection of ¥2.3 trillion.

Zacks Rank & Other Key Picks

Toyota currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader auto sector are General Motors Company GM, Cooper Tire & Rubber Company CTB, and Genuine Parts Company GPC, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Motors has an expected long-term growth rate of 8.5%. Share price of the company has increased 6.2% in the past six months.

Cooper Tire has an expected long-term growth rate of 4%. Over the past six months, shares of the company have gained 12.7%.

Genuine Parts has an expected long-term growth rate of 5%. Shares of the company have gained 3.2% in the past six months.

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