Toyota Motor Corp. (TM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:
Toyota posted earnings of $3.28 per ADR in second-quarter fiscal 2015, surpassing the Zacks Consensus Estimate of $3.14. Consolidated revenues increased 4.3% year over year to $63 billion, also surpassing the Zacks Consensus Estimate of $59.33 billion. Toyota raised its earnings and revenue guidance for fiscal 2015. Its leading position in terms of global vehicle sales and focus on product development, capacity increases and expansion in emerging markets are other positives. However, a string of product recalls and declining operating cash flow are some of the headwinds for this stock. Considering all the pros and cons, we are maintaining the Neutral recommendation on Toyota.

Overview:

Japan-based Toyota Motor Corporation (TM) is the leading automaker in the world in terms of sales and production. Its product portfolio consists of a full range of models from passenger cars and minivans to trucks as well as related parts and accessories. The company’s operations are classified into three segments: Automotive (92.3% of net revenue in first-half fiscal 2015), Financial Services (6%) and All Other (4.3%).*

Toyota’s Automotive business caters to its domestic market as well as markets in North America, Europe and other countries. Other markets include East and Southeast Asian countries. Globally, Toyota sold approximately 4.48 million vehicles in first-half fiscal 2015.

Roughly 60% of all Toyota vehicles sold in North America are built locally, with parts sourced from over 500 North American suppliers. Toyota has 51 manufacturing companies in 27 countries and regions, producing vehicle brands including Toyota, Lexus, Hino and Daihatsu as well as automobile components.

Toyota’s Financial Services business primarily finances dealers and customers for the purchase or lease of Toyota vehicles. The business also offers retail leasing through the purchase of lease contracts originated by Toyota dealers.

Toyota’s All Other business segment comprises the design and manufacture of prefabricated housing and information technology related businesses, including an eCommerce platform called GAZOO.com.

*Note: The percentage of segment sales do not ad up to 100% due to inter-segment sales and transfers.

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