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Toyota Motor decreases
April 08, 2019 15:00 JST

Toyota Motor Corporation (TO:7203), the largest Transportation equipment company by market cap in Japan, has decreased JPY52.0 (0.8%) from its previous trading session to close at JPY6,788.0 on Monday. Compared with the Nikkei 225 Index which fell 45.9 points (0.2%) in the day, the relative price change was -0.6%. The volume was 0.6 times the average daily trading volume of 6.3 million shares. Its MCap is JPY22,128.9 billion (US$198.7 billion).

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

SECTION 2 BULLISH SIGNALS

SECTION 3 PRICE VOLUME DYNAMICS

SECTION 4 RELATED NEWS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF JPY6,788.0):

SECTION 5 BULLISH PARAMETERS

SECTION 6 BEARISH PARAMETERS

SECTION 7 OTHER NEWS

SECTION 8 SUMMARY FINANCIALS

SECTION 9 CORPORATE PROFILE

SECTION 1 TOYOTA MOTOR BEARISH SIGNALS

1.1 Fundamentals:

Overvaluation [compared with sector average]:

+ Price/Sales of 0.8 [0.5].

+ Price to Book of 1.1 [1.0].

+ Dividend yield of 1.5% [2.5%]. The relative yield of Toyota Motor, defined by its yield of 1.5%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 2.2% is 65.3%. This suggests Toyota Motor stock is overvalued in dividend yield terms.

+ Price to EBITDA of 8.4 [7.1].

1.2 Downtrend:

Toyota Motor drops on high volatility

1.3 Overbought/Bearish/Resistance Signals:

+ The stock is overbought according to the Williams % R indicator of -17.3, suggesting the price is close to its 14-day high of JPY6,851.0.

+ The Stochastic indicator of 90.9 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

Low Performance Indicators and rank of Toyota Motor in the Japan market:

DescriptionValueRank In Market
Debt to Equity1.0In Bottom Quartile
Earnings Yield %12.4In Bottom Quartile

SECTION 2 TOYOTA MOTOR BULLISH SIGNALS

2.1 Fundamentals:

Undervaluation [compared with sector average]:

+ Price/Earnings of 8.1 [8.7]. We estimate Toyota Motor stock is trading at a current year P/E of 8.2 and a forward year P/E of 7.7. The P/E of 8.1 plus annual inflation in the Japan of 0.2% adds up to 8.3, well within the value benchmark Rule of 19.

+ The price earnings ratio of 8.1 divided by annual growth in EPS (FY2018 vs FY2017) of 39.1% corresponds to an attractive P/E/G of 0.2 times ; being less than the value benchmark of 1.0.

+ Toyota Motor is cash rich with Cash to Market Capitalisation at 12.1%.

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued.

2.2 Uptrend:

+ The present value of JPY1,000 (PV1000) invested one month ago in Toyota Motor is JPY1,029, for a capital gain of JPY29.

PV10001-week1-month1-year
7203.TO1,0211,0291,038
Nikkei 225 Index1,0121,0141,009

High Performance Indicators and rank of Toyota Motor in the Japan market:

DescriptionValueRank In Market
Today's Trading TurnoverJPY25.5 billion (US$228.5 million)In Top 1%
Price/Earnings/Growth0.2In Top Quartile

SECTION 3 TOYOTA MOTOR PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 3,750,000 shares worth JPY25.5 billion (US$228.5 million) traded today. In the past week, volume was 0.7 times average and the shares were up 2.1%.

+ Toyota Motor is at a discount of 10.4% to its 12-month high of JPY7,578.08 on May 11, 2018. It is also at a premium of 12.3% to the 12-month low of JPY6,045.0 on December 26.

3.2 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 49.8% (or a turnover period of 2 years 4 days). This average length of ownership of the stock at 2.0 times the average holding period of 1 year for stocks in the Nikkei 225 Index suggests a larger number of core investors, making a long-term investment safer.

3.3 Beta & Alpha:

+ Beta: the Beta of Toyota Motor stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is 0.8. The actual return of 2.78% exceeded the expected return of 2.0%, reflecting outperformance.

3.4 Year-To-Date

+ Toyota Motor Corporation (TO:7203), added JPY382.0 (or 6%) year-to-date (YTD) in 2019 to close at JPY6,788.0 today. The stock is trading at a Price/Earnings/Growth multiple of 0.2 times. The Price/Earnings/Growth is 0.9 times the sector average of 0.2; and is the 3rd lowest in the Transportation Equipment sector.

SECTION 4 TOYOTA MOTOR RELATED NEWS

American Depository Receipts

+ Toyota Motor ADR in its biggest weekly gain in 3 months

Toyota Motor Corporation (N:TM), the International Depository Receipt (IDR) market's largest Auto manufacturers company by market cap, has increased 46.0c (0.4%) from its previous trading session to close at $US122.54 on Friday. Compared with the Bank of New York Mellon Composite ADR Index which rose 0.6 points (0.4%) in the day, the relative price change was -0.02%. The volume was 0.6 times the average daily trading volume of 211,050 ADRs. In the past week the ADRs have lifted 3.8%, the biggest weekly gain since January 10. Its MCap is $US199.7 billion.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF JPY6,788.0):

SECTION 5 TOYOTA MOTOR BULLISH PARAMETERS

5.1 Growth and Performance:

+ Return on Equity 12.8% [11.3%].

+ Year-on-Year Earnings Growth of 39.1% [35.7%].

+ The P/E of 8.1 multiplied by the P/NTA of 1.1 is 9.2. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

+ Economic Value Added defined by Net Operating Profit After Tax of JPY2,261.1 billion less Cost of Capital of JPY14.1 billion was JPY2,246.9 billion. The multiple EVA/Cost of Capital was exemplary at 159 times.

+ Return on Assets 5.1% [4.7%].

+ Interest cover defined by EBIT/I is 96 times. This indicates it is less leveraged.

+ Net profit margin has averaged 8.1% in the last 3 years. This is better than the sector average of 5.8% and suggests a high margin of safety.

+ Brandirectory have estimated Toyota Motor's brand value at JPY2,893.6 billion (US$26 billion). The Brand Value represents 6.9% of the estimated Enterprise Value of JPY42,170.6 billion (US$378.6 billion).

+ As per the Du Pont analysis, Return on Equity [ROE] of 12.8% is better than sector average of 11.3%. ROE is computed as net profit margin of 8.8% times asset turnover [sales/assets] of 0.59 times leverage factor [total assets/shareholders' equity] of 2.6.

5.2 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 13%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in 7203 would have produced a return of 3.8%.

7203Close (JPY)Dividends (JPY)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 086,7881002.31.53.8
1 Yr ago6,633.5322017.63.921.5
2 Yrs ago5,640.5821012.54.216.7
3 Yrs ago5,015.28210(33.4)2.8(30.6)
4 Yrs ago7,526.1620049.5453.5

Close 5 years ago JPY5,033.83

5.3 Present value of JPY1,000 invested thirty years Ago

+ The present value of JPY1,000 (PV1000) invested thirty years ago in Toyota Motor is JPY5,343, including a capital gain of JPY3,610 and dividend reinvested of JPY734.

+ 30 years Multiplier in JPY = 5.343x

+ Annualized Total Shareholder Returns (TSR) in JPY = 5.7%

Apr 08, 2019: USD 1 equals JPY 111.38

5.4 Increased VWAP

Past five years, 12 months ended Apr 08 (JPY)

YearHigh PriceVWAPLow Price
20197578.086864.026045.0
20187562.376388.175412.43
20176765.415592.854533.94
20167770.96508.794849.3
20157731.076007.614529.14

In the past five years Volume Weighted Average Price (VWAP) has increased by 14.3% to JPY6,864.02.

SECTION 6 TOYOTA MOTOR BEARISH PARAMETERS

6.1 Growth and Performance:

+ Return on Capital Employed 8.1% [8.5%].

6.2 Declining ADVT past five years

Avg. Volume Traded 12 months ended Apr 08, million shares

YearADVT
20196.3
20186.4
20179.3
20169.7
20158.4

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 24.4% to 6.3 million shares.

6.3 Declining Average Daily Turnover

Past five years, 12 months ended Apr 08 (JPY billion)

YearAverage Daily Turnover
201942.7
201840.4
201750.5
201661.7
201549.6

In the past five years, average daily share turnover has decreased 13.9% to JPY42.7 billion. This suggests decreased liquidity.

SECTION 7 OTHER NEWS

+ BuySellSignals/News Bites:

Toyota Motor Corporation is placed 765/3470 in BuySellSignals News Bites' ranking of Japan performers in the past week, a percentile ranking of 78.

+ Vanguard Total World Stock ETF 7571:

The stock was one of 7571 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 4,900 shares in the period Jan 31, 2019 to Feb 28, 2019 worth $US-32,695,911 at an estimated Volume Weighted Average Price (VWAP) of $US6672.6349. As at Feb 28, 2019, the Vanguard Total World Stock ETF held 867,494 shares worth $US52,356,718 or 0.3% by value of the ETF's portfolio [Ranked 35 out of 7571 by value and 1 out of 1333 for Japan].

SECTION 8 TOYOTA MOTOR SUMMARY FINANCIALS

8.1 Dividend History

+ Trailing 12 months dividend has deteriorated from JPY200.0 in 2015 to JPY100.0 in 2019.

8.2 Financials Summary

Year endedMar 2018Mar 2017Mar 2016
Sales (USD B)263.7247.7254.3
Pretax (USD B)23.519.626.7
Net (USD B)22.316.420.7
EPS (JPY)842605.47735.36

+ Net profit was up 36.2% from US$16.4 billion in 2017 to US$22.3 billion in 2018.

+ Earnings Per Share (EPS) was up 39.1% from JPY605.47 to JPY842.0.

SECTION 9 CORPORATE PROFILE

9.1 Activities

Toyota Motor primarily conducts automobile, financial and other businesses. Its business segments are automotive operations, financial services operations and all other operations. Its automotive operations include the design, manufacture, assembly and sale of passenger cars, minivans and trucks and related parts and accessories. Toyota's financial services business consists primarily of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles.

9.2 Top Management

The chairman is Takeshi Uchiyamada.

9.3 Issued Capital and MCap

Based on 3,260,000,000 issued shares the market capitalisation is JPY22,128.9 billion (US$198.7 billion).

COMPANY IDENTIFIERS

Contact: 81 56 52 82 12 1

Physical Address: 1 Toyota-cho Toyota City Aichi, 471-0826 Japan

State/Province/Country: ACH, Japan

Country of Incorporation: Japan

Exchange: Tokyo Stock Exchange

Business Sector: Transportation

Economic Sector: Industrials

ISIN: JP3633400001

TO:7203; TYO:7203; T:7203; JP:7203; 7203.T

RIC: 7203.T

Toyota Motor Corp

For comprehensive research on Toyota Motor Corporation, including details from the latest Annual Report and extensive financial data, please search by Company Name on source name "News Bites Stock Review" on Lexis-Nexis platforms.

Source: www.BuySellSignals.com