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TheStreet Open House

Three Buy-Rated Automakers For 2014

Stocks in this article: FTMGM

TheStreet Ratings team rates Toyota Motor Corp as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate Toyota Motor Corp (TM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 32.55% and other important driving factors, this stock has surged by 42.60% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Toyota Motor Corp has improved earnings per share by 32.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Toyota Motor Corp increased its bottom line by earning $6.46 a share vs. $2.19 a share in the prior year. This year, the market expects an improvement in earnings ($11.30 vs. $6.46).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Automobiles industry average. The net income increased by 32.8% when compared to the same quarter one year prior, rising from $3,398 million to $4,513 million.
  • Net operating cash flow has increased to $9,638 million or 35.7% when compared to the same quarter last year. In addition, Toyota Motor Corp has also modestly surpassed the industry average cash flow growth rate of 31.3%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market on the basis of return on equity, Toyota Motor Corp has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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