- Price
- $194.61
- Fair value
- $237.00
- Discount
- 17.9%
- Uncertainty
- High
- LSEG rating
- 2.20
- Moat
- None
- Next earnings
- 2026-11-04
- Next earnings is estimate
- Yes
- Company name
- Toyota Motor
- Sector
- Automobiles
- About
- Toyota Motor is one of the largest carmakers in the world, based in Toyota City, Japan. It sells cars, trucks and SUVs under the Toyota and Lexus brands in Japan, North America, Europe, Asia and other regions, and it also has a large financial services business that lends to car buyers and dealers. It leads the market for hybrid vehicles (HEVs), and it also sells plug-in hybrid, battery electric and fuel cell vehicles. In the quarter to June 30, 2026, it sold 2.40 million vehicles on a consolidated basis, and electrified vehicles were 55% of Toyota and Lexus sales. Its fiscal year ends on March 31; sales revenues were ¥50.7 trillion in fiscal 2026. Its shares trade in Tokyo, and its ADRs trade on the NYSE.
- Thesis
- The market prices Toyota for falling profit, for US tariffs and for the costs of the move to new technologies. Toyota expects operating income of ¥3.4 trillion in the fiscal year to March 2027, down from ¥3.77 trillion, because of tariffs, higher material costs, the situation in the Middle East and higher spending. Its profit also depends on the exchange rate of the yen: the new forecast assumes ¥160 per US dollar. Investors also worry that battery electric and software vehicles from Chinese makers can take share from it over time. Results are better than feared: in Q1 fiscal 2027, operating income was ¥1.06 trillion, close to a year earlier, and Toyota raised its full-year operating income forecast by ¥400 billion. It also started a buyback of up to ¥1 trillion. For the gap to close, three things must be true. Toyota must reach its raised forecast while hybrid sales keep growing. Cost reduction and price must offset tariffs and material costs. Toyota must keep improving its capital efficiency with buybacks and the sale of cross-shareholdings. The Q2 fiscal 2027 report, estimated for about November 4, 2026, is the next test. The full-year results and the fiscal 2028 forecast in May 2027 are the main test. If these checks pass, the gap can close over the next three to six quarters. The main reason it may not close is a stronger yen, which would lower its profit from exports.
- Risks
- US tariffs on imported vehicles and parts raise Toyota's costs. Higher tariffs, or new trade rules in other markets, can lower its profit.
A large part of Toyota's profit comes from exports. A stronger yen against the US dollar and the euro would lower its operating income.
Chinese carmakers sell battery electric and software vehicles at low prices. They can take share from Toyota in China, Asia and other markets.
Earthquakes, supply disruptions and conflicts, such as the situation in the Middle East, can stop production or shipments. The effect of the 2026 Kumamoto earthquake was not yet in the forecast.
- Balance sheet
- At June 30, 2026, Toyota had total assets of ¥102.64 trillion, liabilities of ¥64.41 trillion and shareholders' equity of ¥38.23 trillion. Most of its debt belongs to its financial services business, which funds loans to car buyers and dealers. Outside financial services, total liquid assets (cash, time deposits, bonds and monetary trust funds) were ¥14.73 trillion, down from ¥17.42 trillion at March 31, 2026. Cash and cash equivalents fell by ¥2.32 trillion to ¥10.34 trillion in the quarter. Equity fell 6.8% in the quarter, mostly because of the sale of its shares in Toyota Industries and the deconsolidation of Hino Motors. Net cash from operating activities was ¥536.5 billion in Q1 fiscal 2027. Toyota plans an annual dividend of ¥100 per share and has a buyback program of up to ¥1 trillion to August 2027.
As of 2026-06-30.
- Checkpoints
- Nov 4, 2026 (estimate): Q2 fiscal 2027 earnings: tariffs and the forecast. Pending. Watch: Results on track for the ¥3.4 trillion operating income forecast, or a higher forecast, pass; a cut to the forecast fails.
May 2027 (estimate): Fiscal 2027 results and the fiscal 2028 forecast. Pending. Watch: A fiscal 2028 forecast with higher operating income and continued buybacks passes; another year of lower profit fails.
- Recent events
- 2026-10-05: Toyota said that it bought back 35.6 million of its shares for ¥108.5 billion in September 2026 under its ¥1 trillion buyback program.
2026-08-04: Toyota reported Q1 fiscal 2027 results. Sales revenues rose to ¥13.53 trillion and operating income was ¥1.06 trillion, down from ¥1.17 trillion. Net income rose to ¥1.48 trillion with large other income. Toyota raised its forecast for the year to March 2027 to sales revenues of ¥54.0 trillion, operating income of ¥3.4 trillion and net income of ¥3.25 trillion. It said that the effect of the 2026 Kumamoto earthquake was not yet in the forecast.
2026-08-04: The board approved a buyback of up to 500 million shares, or up to ¥1 trillion, from August 5, 2026 to August 4, 2027, and the cancellation of 200 million treasury shares.
2026-05-08: Toyota reported fiscal 2026 results. Sales revenues were ¥50.68 trillion, operating income was ¥3.77 trillion and net income was ¥3.85 trillion. Its first forecast for fiscal 2027 was operating income of ¥3.0 trillion.