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Toyota (TM) Beats on Q3 Earnings and Revenues Estimates

Toyota Motor Corporation 's TM shares fell 1.6% to close at $113.31 on Feb 6 after the automaker reported a decline in fiscal third-quarter earnings and revenues. Toyota recorded earnings of ¥159.54 per share ($2.92 per ADR) in third-quarter fiscal 2017 (ended Dec 31, 2016), down from ¥199.54 ($3.30) earned in third-quarter fiscal 2016 (ended Dec 31, 2015). Earnings surpassed the Zacks Consensus Estimate of $2.14. The Japanese automaker reported consolidated net income of ¥486.5 billion ($4.46 billion) in the quarter, down 22.5% from the year-ago period.

Consolidated revenues decreased 3.5% year over year to ¥7.08 trillion ($64.94 billion) in the reported quarter. The figure, however, surpassed the Zacks Consensus Estimate of $64.18 billion.

Unit sales went up 2.9% year over year to 2.28 million vehicles globally. Sales improved 8.5% to 533,919 units in Japan; 2.3% to 744,647 vehicles in North America; 10.8% to 232,997 vehicles in Europe; and 18% to 428,061 units in Asia. Sales declined 19.4% to 340,225 units in other regions (Central and South America, Oceania, Africa and the Middle East).

Operating income declined 39.3% to ¥438.5 billion ($4.02 billion).

Toyota Motor Corp Ltd Ord Price, Consensus and EPS Surprise

Toyota Motor Corp Ltd Ord Price, Consensus and EPS Surprise | Toyota Motor Corp Ltd Ord Quote

Segment Results

The Automotive segment's revenues fell 3.7% to ¥6.47 trillion ($59.36 billion) in the reported quarter, while operating income tumbled 37% to ¥382.76 billion ($3.51 billion).

The Financial Services segment's revenues declined 1.7% to ¥476 billion ($4.37 billion), while the operating income decreased 57% to ¥42.7 billion ($391.7 million).

All Other businesses' revenues dropped 2.5% to ¥276.1 billion ($2.53 billion) in the quarter. Operating income deteriorated 7.6% to ¥16.5 billion ($151.4 million).

Financial Position

Toyota had cash and cash equivalents of ¥2.55 trillion ($23.4 billion) as of Dec 31, 2016, compared with ¥2.93 trillion ($25.6 billion) as of Mar 31, 2016. Long-term debt amounted to ¥14.08 trillion ($129.2 billion) as of Dec 31, 2016 compared with ¥13.59 trillion ($113.25 billion) as of Mar 31, 2016.

In the first nine months of fiscal 2017, operating net cash flow was ¥2.16 trillion ($20.2 billion) compared with ¥3.07 trillion ($25.2 billion) recorded in the year-ago period.

Fiscal 2017 Guidance

Toyota raised its consolidated vehicle sales guidance for fiscal 2017 to 8.90 million units from 8.85 million units guided earlier.

Toyota raised its consolidated revenue guidance to ¥26.5 trillion ($247.7 billion) from the previous forecast of ¥26 trillion ($243 billion) for fiscal 2017. The top-line guidance reflects a 6.7% decline over fiscal 2016.

The operating income guidance has been raised to ¥1.85 trillion ($17.3 billion) from the previous forecast of ¥1.7 trillion ($15.9 billion). The revised guidance implies a 35.2% decrease.

Net earnings are expected to be around ¥1.7 trillion ($15.9 billion), up from the prior view of ¥1.55 trillion ($14.5 billion). The net income guidance reflects expectations of a 26.5% decrease. Earnings are expected to be ¥561.38 per share ($10.49 per ADR).

Price Performance

Toyota has underperformed the Zacks categorized Automotive-Foreign industry over the last three months. The automaker's shares have dipped 0.7% over this period, while the industry witnessed a 2.2% gain.

Zacks Rank & Key Picks

Currently, Toyota carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Penske Automotive Group, Inc. PAG , Fox Factory Holding Corp FOXF and Honda Motor Co., Ltd. HMC .

Honda sports a Zacks Rank #1 (Strong Buy) and has a long-term growth rate of 27%. You can see the complete list of today's Zacks #1 Rank stocks here.

Penske Automotive has an expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy).

Fox Factory holds a Zacks Rank #2. The company has an expected earnings growth rate of 16.6% over the long term.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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