Is it The Time To Invest InToyota Motor Corp (ADR) (NYSE:TM)?


There are several well-known automobile firm in the automotive industry, so what turns Toyota Motor Corp (ADR) (NYSE:TM) into a lucrative stock to invest in? The company is continuing to outperform peers as technology persists to advance. Recently, the automobile manufacturer reported its plans to stop manufacturing gasoline vehicles by 2050.Even though it is an ambitious strategic plan, it is also a strong indicator of how well company is managing to excel in the market.

The organization’s finances have demonstrated that they witnessed times of uncertainties in past couple of years and now are attempting a significant comeback. Few weeks ago, Toyota Motor was once again selected as the Most Valuable International Automotive Brand. The company’s stock has performed well in past five years. It registered a mild decline in mid-2015, and since then it is turning around.

The broader picture

One of the top-most indicators of any firm’s financial health is sales growth. Toyota Motor has continued to register strong revenue growth over the last many years. In fact, since 2011, the total revenue has jumped by more than 30% while its peer Ford Motor Company (NYSE:F) has just recorded revenue growth of 10.49%. This difference in revenue growth reflects the automobile manufacturer has continue to make rationale business decisions to boost team efforts.

Toyota Motor reported plans to evolve with the upcoming technology by lowering the number of gas-fueled vehicles. It is one of the plans that will help company to record sustained revenue growth and keep it at the top position in the automotive industry. If it continues, the company is expected to record substantial revenue growth in the next year. The current price of TM is $125.15 and under favorable conditions it can cross $140 per share. Earnings growth in the next few years is projected to be around 7% per year on average.

Recently, Toyota Motor joined TAKATA CORP UNSP ADR (OTCMKTS:TKTDY) boycott, deepening the safety scandal surrounding the air bag supplier. This measure comes after many automobile companies ditched the inflators, which resulted in the recall of millions of cars. Also, the company intends to invest $1 billion in the coming years to establish a research center in Silicon Valley.

Toyota intends to launch more hydrogen fuel cell automobiles after entering into the new segment with the Mirai model. Industry experts believe that it will take long to advance fuel cell architecture that will lead to success of a mass-market hydrogen car. However, Toyota has always managed to surprise the market by remaining on the top of the technology, and it is expected to continue in the future.

The sales performance

Earlier in this month, Toyota Motor reported sales numbers, wherein November U.S. sales surged 3.4%. The division sales surged 2.8% to 160,177 units, with truck revenue surpassing car sales.Lexus segment sales jumped 6.8% to 29,340 units.

Toyota Motor sales by model details as – Lexus NX 3,824; Highlander decline of 5.5% to 12,741; Corolla drop of 5.5% to 24,194; Camry sales jumped 7% to 30,945; Prius unit sales declined 9.9% to 12,575; RAV4 sales jumped 30% to 27,638 and Lexus ES brand unit sales plunged 20% to 4,725. The average transaction price dropped 0.4% YOY to $31,063. So far in the year, the company’s U.S. sales has jumped 4.7% to over 2 million units.

With the market cap of over $209 billion, Toyota Motor holds top most position in the automotive industry, followed by Daimler AG (OTCMKTS:DDAIY) having market cap of over 92 billion.Toyota has a considerably larger market cap, which suggests a promising growth investment for the company. The company has P/E ratio of 10.4 compared to industry average of 13, which indicates there is ample scope of investment left in the company.

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