General Motors Company (GM), Ford Motor Company (F), Toyota Motor Corporation (ADR) (TM): A Performance Review of the US Auto Industry

Toyota: Waking from the nightmare

Toyota Motor Corporation (ADR) (NYSE:TM) is not the exception to the rule in this analysis: its stock price has improved almost 60% since June 2012. Then in 2013, the company increased sales in every region as compared to 2012. Moreover, it increased its net revenue by 18.7% to 22.064 billion yen and net income for an outstanding 239.3% for a total of 962 billion yen. The company has certainly recovered from Japan’s earthquake that caused a $1.3 billion blow and allegations of faulty vehicle parts that resulted in recall costs of over $3 billion. It currently holds 14.2% of the US automobile market share and for 2014, management guidance expects vehicle sales to increase in every region, bumping up these numbers. Net revenue is expected to rise as well, reaching 1.435 billion yen, along with net income that will reach 410 billion yen.

Toyota Motor Corporation (ADR) (NYSE:TM) is trading with a higher price-to-earnings ratio at 23 times, compared to the industry average of 15 times. Its price/earnings-to-growth ratio is 0.3 times. Its price-to-book ratio is in line with the industry average at 1.8 times, as well as its dividend yield at 1.1%. Given these fundamentals, the company’s stock is properly valued and investors should wait for a drop to acquire this Japanese company’s shares.

Bottom line

General Motors Company (NYSE:GM)‘ revenue is still very dependant on the North American division, with a total of 62% coming from North America. Despite the company’s efforts to expand in Asia, the numbers indicate a higher investment risk than with Ford Motor Company (NYSE:F) or Toyota Motor Corporation (ADR) (NYSE:TM). When it comes to stock growth, Ford is the safest bet, but you should keep an eye on the European market recovery just in case. Toyota investors should wait for a price drop to correct its value.

The article A Performance Review of the US Auto Industry originally appeared on Fool.com and is written by Vanina Egea.

Vanina Egea has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Vanina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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