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Toyota (TM) Expands in Evolving Markets for Sales Growth

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On Sep 22, we issued an updated research report on Toyota Motor Corporation (TM - Free Report) .

Toyota reported earnings per share of $3.65 per ADR in first-quarter fiscal 2018 (ended Jun 30, 2017), beating the Zacks Consensus Estimate of $2.68. Quarterly revenues rose 7% year over year to ¥7.05 trillion ($63.51 billion). The top line also surpassed the Zacks Consensus Estimate of $60.89 billion.

Toyota reiterated consolidated vehicle sales guidance for fiscal 2018 to 8.9 million units, marginally lower than 8.97 million units recorded in fiscal 2017.

Toyota Motor Corp Ltd Ord Price and Consensus

 

Also, net revenues for fiscal 2018 are expected to be ¥ 28.5 trillion ($259.1 billion).

Net earnings are estimated to be around ¥2.05 trillion ($18.63 billion), an increase from the previous guidance of ¥1.5 trillion ($14.3 billion).

Toyota expects emerging markets with high-growth potential to play a major role in company’s sales growth. Hence, it is expanding footprint in the evolving markets. Earlier in January, Toyota along with Daihatsu had formed an internal company called Emerging-market Compact Car Company to cater to the needs of compact vehicles sector in emerging markets.

Also, to improve product development process and increase competitiveness of the output, the company has started a new initiative called Toyota New Global Architecture (TNGA). Under this initiative, the automaker is planning to shift half the total vehicles it manufactures to new cost-saving platforms by 2020.

To focus on the North American market, Toyota had signed an agreement with Mazda in August to set up a joint venture, wherein, both the companies are set to build a vehicle manufacturing plant in the United States. Toyota will independently manufacture Corolla model in the new plant, whereas Mazda will produce cross-over models for the same target market.

Price Performance

Toyota’s stock has surged 14.9% in the last three months, breezing past the 14.3% rally of the industry it belongs to.

Zacks Rank & Other Key Picks

Toyota currently flaunts a Zacks Rank #1 (Strong Buy).

Some other top-ranked automobile stocks are Allison Transmission Holdings Inc. (ALSN - Free Report) , Ferrari N.V. (RACE - Free Report) and Daimler AG , all currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has a long-term growth rate of 10%.

Ferrari has an expected long-term earnings growth rate of 14.1%.

Daimler has a long-term growth rate of 2.8%.

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