Since Toyota Motor Corporation (NYSE:TM) released its earnings in September 2017, analysts seem cautiously bearish, with earnings expected to grow by 1.55% in the upcoming year relative to the higher past 5-year average growth rate of 22.92%. Currently with earnings of ¥1,821,314.0M, we can expect this to reach ¥1,849,471.5M by 2018. Below is a brief commentary around TM’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of Toyota Motor should research its fundamentals here. Check out our latest analysis for Toyota Motor
How is TM going to perform in the near future?
The view from 22 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TM’s earnings growth over these next few years.
By 2020, TM’s earnings should reach ¥2,102,980.2M, from current levels of ¥1,821,314.0M, resulting in an annual growth rate of 5.70%. This leads to an EPS of ¥776.39 in the final year of projections relative to the current EPS of ¥605.47. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2020, TM’s profit margin will have expanded from 6.60% to 7.21%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Toyota Motor, I’ve put together three pertinent aspects you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is TM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TM is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.