01. Toyota Motor Corporation (NYSE:TM)
Forward Price to Earnings (P/E) ratio: 7.61
Number of Hedge Fund Holders: 14
Toyota Motor Corporation (NYSE:TM) designs, manufactures, assembles, and sells passenger vehicles, minivans and commercial vehicles, and related parts and accessories in Japan, North America, Europe, Asia, Central and South America, Oceania, Africa, and the Middle East. It operates through Automotive, Financial Services, and All Other segments. The company was founded in 1933 and is headquartered in Toyota, Japan. Toyota Motor Corporation (NYSE:TM), one of the largest automakers globally, is a prominent blue-chip stock known for its reliable performance, and currently, it boasts a forward P/E ratio of 7.61 as of October 11, making it an attractive investment for value-seeking investors. This low P/E ratio highlights Toyota Motor Corporation (NYSE:TM) strong earnings potential relative to its stock price, a critical consideration for those looking to invest in high-quality companies at a discount.
Despite facing a slight decline in U.S. sales in July 2024, with a -5.1% decrease in total units sold compared to July 2023, Toyota Motor Corporation (NYSE:TM) luxury Lexus division saw an impressive 16.1% increase in sales. This performance highlights Toyota’s ability to navigate market challenges while maintaining strength in key segments. Additionally, the U.S. automobile SAAR for July 2024 reached 15.8 million units, reflecting resilience in the broader automotive market.
Toyota Motor Corporation (NYSE:TM) financial metrics further strengthen its investment appeal. The company reported consolidated net income of $357 million for Q1 FY2025, slightly down from $392 million in the same period the previous year. This reduction was largely due to a $544 million rise in interest expenses, offset by gains in total financing revenues, which grew by $305 million. Additionally, Toyota experienced lower depreciation on operating leases and an increase in investment income. The company’s ability to generate solid revenues while managing expenses highlights its operational efficiency.
Toyota Motor Credit Corporation (TMCC), a subsidiary responsible for financing, also posted noteworthy results. The increase in financing revenues reflects strong demand for Toyota vehicles, despite a rise in credit losses due to economic conditions. This emphasizes Toyota’s ability to maintain financial stability through diversified revenue streams.
With a debt-to-equity ratio of 7.0x, up from 6.6x in the previous year, Toyota Motor Corporation (NYSE:TM) demonstrates sound financial management, using debt strategically to fuel growth. As a blue-chip stock with a low forward PE ratio and a robust financial foundation, Toyota Motor Corporation (NYSE:TM) remains a compelling choice for long-term investors looking for value and stability in the automotive sector.
While we acknowledge the potential of TM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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