Key Takeaways
- Toyota shares jumped 10% on a raised profit forecast and an $89 billion shareholder return plan.
- A weaker yen did most of the work, with help from hybrids and lower US tariffs.
- Honda’s next report will test the yen boost, and General Motors shows buybacks alone don’t earn a higher multiple.
- Toyota traded below its five-year average forward price/sales at the last close.
Toyota Motor (TM) is up 10% today after raising its profit forecast and promising up to ¥14 trillion ($89 billion) to shareholders by March 2031.
Honda Motor (HMC) is up 3% ahead of its own report, and General Motors (GM) is down 4%.
“The fact that they guided upwards and then they had all the shareholder payout stuff, it’s like, ‘wow’,” Christopher Richter, autos analyst at CITIC Securities Japan, told Reuters.
What exactly happened
- July-September operating profit rose 34% to ¥1.13 trillion, beating forecasts.
- The full-year operating profit forecast rose ¥500 billion, to ¥3.9 trillion.
Going into the report, analysts already had EBITDA recovering after a roughly 30% fall from fiscal 2024 to fiscal 2026 (years to March):
Toyota now guides operating profit up from ¥3.77 trillion last year, in line with that rebound.
The yen did the heavy lifting
TIKR’s figures show the operating margin falling as low as 4.6% in the March quarter:
In July-September, it recovered to 8.4%. Exchange rates added ¥685 billion to first-half operating profit, nearly four times the ¥185 billion year-over-year gain. Hybrids and lower US tariffs helped too, offsetting a slide in China.
Honda should get the same yen boost. It raised its full-year operating profit forecast to ¥650 billion from ¥500 billion in August. If it raises again, this is a tailwind for every big Japanese exporter.
See analyst ratings on Toyota Motor (it’s free):
See the full breakdown of Buy, Hold, and Sell ratings on Toyota Motor, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Toyota Motor’s Analyst Ratings
The cash pile finally goes to work
Toyota held ¥9.48 trillion of cash on Sept. 30. At the last close, it traded at 0.7x forward sales, against a five-year average of 0.8x:
GM shows what buybacks can’t do on their own. Its share count fell from 1.2 billion at the end of 2023 to 849 million on Sept. 30, and it still trades at 6.4x forward earnings.
Bottom line: profits are rising again and the cash finally has a plan, so I see more upside for Toyota. Of course, the forecast assumes ¥157 to the dollar, and a stronger yen could cut into that ¥3.9 trillion fast.
So what is Toyota stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
