Toyota Motor Corporation
) is reportedly repurchasing 1.89% of its shares worth as much as
360 billion yen ($3.5 billion). The automaker also stated that it
will be buying back almost half of these proposed 60 million
shares by June.
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This share repurchase program by Toyota is first in the last five
years and is the biggest since 2003. This repurchase strategy is
supported by the improved balance sheet at the end of the fiscal
2013 together with higher profit expectations for the year ending
Mar 31, 2014.
Toyota had cash and cash equivalents of ¥1,843.4 billion ($18.4
billion) as of Dec 31, 2013, compared with ¥1,718.3 billion
($21.2) as on Mar 31, 2013. In the first nine months of fiscal
2014, operating net cash flow improved to ¥2,727 billion ($27.3
billion) from ¥1,746.2 billion ($21.6 billion) recorded in the
Toyota's operating income is expected to rise 81.7% year over
year to ¥2,400 billion ($24 billion) in fiscal 2014. Net earnings
are expected to surge 97.5% to ¥1,900 billion ($19 billion).
Toyota said that it will be selling 30 million shares to Japan
Trustee Services Bank for 1 yen per share. The automaker will
also be paying dividends which will be used for developing the
auto industry and for environmental protection. The remaining 30
million shares will be cancelled. However, the share buyback is
subject to approval at the annual general shareholders' meeting.
Toyota also focuses on enhancing sales and production by using
the cash balance. Recently, Toyota along with
Honda Motor Co., Ltd.
) announced plans to introduce fuel-cell vehicles by 2015. Both
the companies intend to produce around 1,000 eco-friendly
vehicles per year.
Toyota and Honda's fuel cell vehicles will provide better mileage
compared to the electric vehicles. The initial price of the
vehicle is estimated to be around 10 million yen or $97,700.
Toyota's fuel cell vehicles will target the Japanese, European
and U.S market in 2015. The company also plans to increase the
annual output to 10,000 vehicles by 2020. In addition, to capture
a larger market, Toyota intends to slash prices by about 3-5
million yen or $29,300-$48,900 in 2020.
Currently, Toyota retains a Zacks Rank #2 (Buy).
Some other automobile stocks worth considering are
Tata Motors Limited
). Both sport a Zacks Rank #1 (Strong Buy).