Toyota Motor Corp Stock Upgraded (TM)

NEW YORK ( TheStreet) -- Toyota Motor (NYSE: TM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $3,660.00 million or 26.51% when compared to the same quarter last year. Despite an increase in cash flow, TOYOTA MOTOR CORP's average is still marginally south of the industry average growth rate of 31.42%.
  • Even though the current debt-to-equity ratio is 1.17, it is still below the industry average, suggesting that this level of debt is acceptable within the Automobiles industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.78 is weak.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • TOYOTA MOTOR CORP's earnings per share declined by 14.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TOYOTA MOTOR CORP increased its bottom line by earning $3.15 versus $1.43 in the prior year. For the next year, the market is expecting a contraction of 41.1% in earnings ($1.86 versus $3.15).
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Toyota Motor Corporation engages in the design, manufacture, assembly, and sale of passenger cars, minivans, and commercial vehicles. The company has a P/E ratio of 27.4, below the average automotive industry P/E ratio of 51.3 and above the S&P 500 P/E ratio of 17.7. Toyota has a market cap of $113.4 billion and is part of the consumer goods sector and automotive industry. Shares are up 31.3% year to date as of the close of trading on Monday.

You can view the full Toyota Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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