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Toyota (TM) Recalls 700K Vehicles to Fix Faulty Fuel Pump

Zacks Equity Research

Toyota Motor Corporation TM recently recalled 700,000 vehicles, including its namesake and Lexus brands in the United States, in order to fix fuel-pump issues. These vehicles have fuel pumps that could stop operating, causing the cars to stall, in turn escalating the risk of a crash.

The recalled Toyota vehicles are certain models from 2018 and 2019, including 4Runner, Camry, Highlander, Land Cruiserand Tundra, along with 2019 Avalon and Corolla sedans.

The recalled Lexus vehicles include certain 2018 and 2019 models, namely LS 500, LC 500, LX 570, GX 460 and RX 350. A few Lexus NX 300, RX 350L and GS 300 models from 2019 have also been affected.

The company is in the process of developing a solution for the problem, and aims to contact the affected vehicle owners by mid-March 2020. Once a solution is found, owners can get repairs free of charge.

Shares of Toyota have outperformed the industry it belongs to. Its shares have appreciated 11.7% compared with the industry’s rise of 3.7%.

 

For the past few years, Toyota has been recalling vehicles in large numbers for various safety concerns. Frequent recalls not only affect the company’s reputation but also result in significant expenses and lower the vehicle resale value. In the last few years, Toyota has paid several large fines due to safety defects in some vehicles, as well as to settle lawsuits.

For fiscal 2020, Toyota Motors expects consolidated vehicle sales of 8.95 million units. The company forecasts consolidated net revenues of ¥29.5 trillion, operating income of ¥2.4 trillion and net income of ¥2.15 trillion.

Zacks Rank and Stocks to Consider

Currently, Toyota Motors carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include Tesla, Inc. TSLA, Visteon Corporation VC and SPX Corporation SPXC, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Tesla has an estimated earnings growth rate of 3,347.37% for 2020. The company’s shares have appreciated 55.4% in a year’s time.

Visteon has a projected earnings growth rate of 69.76% for the ongoing year. Its shares have gained 23.8% over the past year.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has surged 80.9% in the past year.

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