Toyota Motor Corporation (ADR) (TM): What Did You Miss?

Valuations and Metrics

Toyota Motor Corporation (ADR) (NYSE:TM) is a fair bit more expensive than its competitors, which is apparently the premium the market is willing to pay for the company’s strong performance. It currently trades at 18.81 times trailing earnings, which is considerably higher than Ford Motor Company (NYSE:F)’s 9.62 and GM’s 10.86. The forward P/E is quite a bit lower though at around 13. The company’s operating margin of around 5% is on par with that of Ford and quite a bit higher than GM’s 1%. Looking at the balance sheet, Toyota has some $35.5 billion in cash and a debt load of around $165 billion. This gives it a fairly high total debt to equity ratio, but this is not unusual for car makers. Finally, it has an operating cash flow of nearly $31 billion.

The Bottom Line

Car sales seem to be increasing worldwide, with US as well as Asian car makers reporting strong sales. However, Toyota Motor Corporation (ADR) (NYSE:TM) seems to be growing a lot faster than the competition, helped in part by a weaker yen and the company’s cost cutting measures. On the back of these figures, the company expects its strong performance to continue in fiscal 2014. While the stock isn’t exactly a bargain at the moment, one could expect further upside based on these strong results and encouraging outlook.

The article Another Great Quarter for the World’s No. 1 Automaker originally appeared on Fool.com and is written by Daniel James.

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