Citigroup Downgrades Toyota Motor to ‘Neutral’

Toyota Motor (TM) has a market cap of $198.3 billion. It fell by 0.50% to close at $120.29 per share on August 25, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.1%, 8.8%, and -2.2%, respectively, on the same day. TM is trading 3.6% above its 20-day moving average, 9.8% above its 50-day moving average, and 8.7% above its 200-day moving average.

The Schwab Fundamental International Large Company ETF (FNDF) invests 0.07% of its holdings in Toyota Motor. The ETF tracks an index of large companies from developed markets outside the United States. Its selection and weighting are based on fundamental factors, including sales, cash flow, dividends, and buybacks. The YTD price movement of FNDF was 4.8% on August 25.

The market caps of Toyota Motor’s competitors are as follows:

• Ford Motor (F) — $49.3 billion
• General Motors (GM) — $48.8 billion

Citigroup has downgraded Toyota Motor rating to “neutral” from “buy.”

In July 2016, Toyota Motor reported total Toyota sales of 214,233 units, a fall of 1.4% from July 2015. It reported total Toyota division sales of 186,343 units, a fall of 0.5% from July 2015. The company reported total Lexus sales of 27,890 units, a fall of 6.5% from July 2015.

Sales reported by type were as follows:

• Toyota car: 101,991 units, a fall of 8.8% from July 2015
• Toyota truck: 112,242 units, a rise of 6.5% from July 2015

Toyota Motor reported fiscal 1Q17 total net revenues of 6.6 trillion Japanese yen, a fall of 5.7% from total net revenues of 7.0 trillion yen in fiscal 1Q16. The company’s operating income fell by 15.1% between fiscals 1Q16 and 1Q17.

Its net income and EPS (earnings per share) fell to 552.5 billion yen and ~179.1 yen, respectively, in fiscal 1Q17, compared with 646.4 billion yen and 205.3 yen, respectively, in fiscal 1Q16.

TM’s cash and cash equivalents rose by 11.4% and its inventories fell by 5.0% between fiscals 4Q16 and 1Q17. Its current ratio and debt-to-equity ratio fell to 1.08x and 1.6x, respectively, in fiscal 1Q17, from 1.13x and 1.7x, respectively, in fiscal 4Q16.

The company has made the following projections for fiscal 2017:

• net revenues of 26.0 trillion yen
• operating income of 1.6 trillion yen
• net income of 1.5 trillion yen

In the next part of this series, we’ll discuss Estée Lauder Companies (EL).