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Toyota Motor Corp ADR TM

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Toyota's Fiscal Second Quarter Bounces Back From COVID-19-Decimated First Quarter

Analyst Note

| David Whiston, CFA, CPA, CFE |

Toyota’s second-quarter fiscal 2021 showed a sharp rebound from the first quarter, which had severe coronavirus-related headwinds. Still, a 17.6% decline in second-quarter consolidated unit volume, which was notably worse than Honda’s 9.1% decline in consolidated automotive unit volume, and less cost-saving tailwinds relative to Honda’s results reported the same day, did not enable Toyota to post meaningful year-over-year EPS growth like Honda’s 24.9%. Toyota’s diluted EPS fell by 10.9%, but management still materially increased its full-year fiscal 2021 guidance from three months ago. We are raising our fair value estimates to $138 and JPY 7,100 due to better fiscal 2021 results than previously modeled as the company recovers from the pandemic faster than expected, higher equity income over our five-year explicit forecast period, and the time value of money. Our USD fair value also benefited from the favorable translation impact of our yen fair value against a stronger yen to the dollar than at our last valuation update.

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Company Profile

Business Description

Founded in 1937, Toyota is one of the world's largest automakers with 10.5 million units sold in fiscal 2020. Its brands include Toyota, Lexus, Daihatsu, and Hino; market share in Japan is about 49%, while U.S. share is nearly 14%. The firm also owns 24.5% of Denso, a parts supplier, 20% of Subaru, and holds investments in many other firms, including about 10.3 million shares of Uber Technologies and about 5% in each of Mazda and Suzuki. Fiscal 2020 sales excluding financial services were JPY 27.8 trillion. Toyota also has a financing arm and manufactures homes and boats.

1 Toyota-cho, Aichi Prefecture
Toyota, 471-8571, Japan
T +81 565282121
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 369,604