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Toyota (TM) to Report Q3 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Toyota TM is slated to release third-quarter fiscal 2021 results on Feb 10. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $3.65 per share on revenues of $73.57 billion.

This Japanese auto giant delivered higher-than-anticipated earnings in the last reported quarter on stellar revenue growth.

Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being a whopping 1,222.21%. This is depicted in the graph below:

Toyota Motor Corporation Price and EPS Surprise

Toyota Motor Corporation Price and EPS Surprise
Toyota Motor Corporation Price and EPS Surprise

Toyota Motor Corporation price-eps-surprise | Toyota Motor Corporation Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Toyota’s fiscal third-quarter earnings per share moved 63 cents north to $3.65 in the past 60 days. However, this compares unfavorably with the year-ago quarter’s earnings of $4.79 per share, indicating a decline of 23.8% year on year. Nonetheless, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 6.01%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Toyota this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Toyota has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Toyota currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

Toyota’s expanding portfolio of product lines and a robust line-up of trucks and SUVs, along with its accelerated transition to electric vehicles, is likely to have aided the auto giant’s fiscal third-quarter sales in the major markets served.

In fact, the surge in vehicle sales in Japan and outside the nation during the October-December period reflects this upside. This, in turn, is likely to have boosted the quarterly top and bottom lines.

For the quarter in discussion, vehicle sales in Japanese market summed 589,255 units, up almost 19% from the 495,380 units sold in the prior-year quarter. This upside primarily resulted from robust demand of the new models, including the Harrier, Yaris, and Raize in the Japanese market.

Total vehicle sales outside Japan totaled 2,255,926 vehicles during the quarter to be reported, rising 3% year on year. These increases have been driven primarily by the soaring sales in North America and China. The demand spike for the Corolla, Levin, and Lexus brand models in the Chinese market, and surging sales of the Camry, RAV4, and Lexus brand models in the North American market have contributed to this upswing.

However, the company’s elevated capital expenditure on advanced technologies and alternative fuels for the development of electric and autonomous vehicles might have dented the fiscal third-quarter margins. Additional costs associated with amplified labor costs and raw material costs across the regions served are also expected to have hurt the firm’s performance.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

BorgWarner BWA has an Earnings ESP of +2.94% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 11.

Allison Transmission Holdings ALSN has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.

Magna International MGA has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release earnings numbers on Feb 19.

More Stock News: This Is Bigger than the iPhone!

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