Toyota Motor Corporation (TM) is one of the stocks that Zacks.com visitors have been watching the most recently. Therefore, it may be a good idea to review some of the factors that may affect the near-term performance of a stock.

The company’s shares have returned -3.5% over the past month, compared to a +2.9% change for the Zacks S&P 500 Composite. Zacks Automotive – The foreign industry, to which Toyota Motor belongs, lost 5.5 percent in the period. Now the important question is: Where can the stock go in the near term?

Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and cause immediate price changes, there are always some underlying factors that ultimately drive the buy-and-hold decision. Let’s move on.

Revenue Estimates Revision

Here at Zacks, we prefer to estimate the change in a company’s future earnings estimates over anything else. This is because we believe that the present value of his future earnings determines the fair value of his stock.

We primarily look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates for a company go up, the fair value of its stock goes up. A fair value higher than the current market price makes investors interested in buying the stock, causing its price to rise. This is why empirical research shows a strong correlation between earnings estimate revisions and trends in near-term stock price movements.

Toyota Motor is expected to post earnings per share of $4.01 for the current quarter, representing a year-over-year change of -43.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -24.5%.

For the current fiscal year, the consensus revenue estimate is $22.07 points, a change of -12.9% from last year. Over the past 30 days, this estimate has changed by +20.8%.

For the next fiscal year, the consensus earnings estimate of $22.82 represents a +3.4% change from what Toyota Motor will report a year ago. Over the past month, estimates have changed by +1.3%.

With a strong externally audited track record, our proprietary stock rating tool, ZacksRank, provides a more definitive picture of near-term stock price direction, as it effectively harnesses the power of revisions to earnings estimates. does. Due to the size of the recent change in consensus estimates, along with three other factors related to earnings estimates, Toyota Motor is assigned a Zacks Rank #3 (Hold).

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimates:

12 months EPS

12 Month Consensus EPS Estimates for TM _12MonthEPSChartUrl12 Month Consensus EPS Estimates for TM _12MonthEPSChartUrl

12 Month Consensus EPS Estimates for TM _12MonthEPSChartUrl

Revenue growth forecast

While a company’s revenue growth is the best indicator of its financial health, it doesn’t matter much if it can’t grow its revenue. It is almost impossible for a company to grow its revenue without growing its revenue over a long period of time. Therefore, it is very important to know the potential revenue growth of the company.

For Toyota Motor, the consensus sales estimate for the current quarter of $72.48 billion indicates a year-over-year change of -5.7%. For the current and next fiscal years, estimates of $319.48 billion and $324.12 billion indicate changes of +2.4% and +1.5%, respectively.

Last reported results and surprise history

Toyota Motor reported revenue of $74.56 billion in the last reported quarter, representing a year-over-year change of +1.8%. EPS of $4.99 for the same period compares to $3.07 a year ago.

The reported revenue represented a +10.94% surprise, compared to the Zacks Consensus Estimate of $67.21 billion. EPS surprise was +71.48%.

The company beat consensus EPS estimates in each of the last four quarters. The company has topped consensus earnings estimates every time in the period.

Value

No investment decision can be effective without considering the stock’s valuation. Whether the current stock price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance.

Comparing a company’s current price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) ratios to its historical values ​​helps determine whether Its stock is undervalued, overvalued or undervalued, while comparing the company to its peers on these parameters gives a good idea of ​​how reasonably priced its stock is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which measures both traditional and unconventional valuations) organizes stocks into five groups from A to F (Better than AB; BC is better; etc.), this is helpful in identifying whether a stock is overvalued, correctly valued, or temporarily undervalued.

Toyota Motor is rated A on this front, indicating that it is trading at a discount to its peers. Click here to see the values ​​of some of the valuation metrics that have driven this grade.

Result

The facts discussed here and many other information on Zacks.com can help determine whether or not the market buzz about Toyota Motor is worth paying attention to. However, its Zacks Rank #3 suggests it may outperform the broader market in the near term.

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