Auto giants Toyota Motor Corp (TM) and Ford Motor Co (F) are gearing up to report earnings on Feb. 6, showcasing their divergent market standings and technological focuses to eager investors.
Toyota, hailing from Tokyo, will kick things off before market hours on Feb. 6, while Ford, based in Dearborn, Michigan, will follow up with its report after the market closes.
With Wall Street anticipating Toyota to reveal a whopping $75.94 billion in third quarter (Q3) revenues, Ford is expected to chalk up 13 cents in Q4 EPS and $39.53 billion in revenues. The two automotive titans boast unique traits across various facets of the industry.
Japanese powerhouse Toyota is renowned for its unwavering commitment to producing top-tier, reliable, and fuel-efficient vehicles. In contrast, American stalwart Ford has enjoyed long-standing dominance in the U.S. market, particularly with its prowess in the realm of trucks and SUVs.
Corporate Realm & Product Portfolio
Toyota commands a significant global market share, boasting a robust presence across Asia, North America, Europe, and other key regions. The company has made its mark in pioneering hybrid technology and establishing a diverse market reach. Ford, while holding strong historical sway in the U.S., possesses a more concentrated international footprint in comparison.
In terms of product lineup, Toyota’s arsenal features a broad spectrum, spanning sedans, SUVs, trucks, and hybrids that underline fuel efficiency, dependability, and unceasing innovation. On the flip side, Ford is widely recognized for its trucks (e.g., the Ford F-Series) and SUVs (e.g., the Ford Explorer), and has been making significant strides in the electric and hybrid vehicle space.
Toyota has been a front-runner in hybrid technology, propelling mainstream adoption, and investing substantially in cutting-edge safety features, autonomous driving technology, and sustainable practices. Meanwhile, Ford is housing its focus on innovation in electric and autonomous vehicles.
Global Headwinds
In January, Ford reported a robust start to the year in the U.S., outperforming Toyota in sales despite encountering hurdles in the electric vehicle segment.
Ford’s U.S. sales surged by 4.3% to 152,617 vehicles, grabbing a market share of 13.7%. This achievement was credited to record sales of the Maverick compact pickup and solid performance in trucks and vans, exceeding its closest rival, General Motors Co (GM).
While hybrid sales for Ford catapulted by 42.7%, EV sales took a hit, plummeting by 10.9% YoY to 4,674 units. The challenges in EV sales are ascribed to factors such as the expiration of federal EV tax credits for the Mustang Mach-E, weather concerns, and spiked interest rates. Ford is recalibrating its EV strategy by adjusting investments and production plans, including for models like the Lightning EV pickup.
Both companies are grappling with the task of adapting to global trends, including the pivot towards electric vehicles and the mounting emphasis on sustainability. Toyota needs to navigate evolving consumer preferences and market dynamics, while Ford is striving to strike a balance between traditional models and the call for sustainable transportation.
Also Read: What’s Going On With Ford Stock?
Valuation Metrics
Over the past year, Toyota stock has soared by over 40%, while Ford has tumbled by over 10%. This contrast is also reflected in their valuations:
Data compiled from Yahoo Finance
As a result, Ford stock is trading at a lower multiple than Toyota stock. Forward P/E for Ford stock at 6.78 appears to compare very favorably relative to peer Toyota at 17.7 forward P/E.
Analyst ratings corroborate this viewpoint:
Current consensus analyst ratings deem Ford stock a hold, with the stock offering just over 5% upside. The price of Toyota stock, on the other hand, has edged ahead of its intrinsic valuation, which now lies 2.78% below it, per analyst consensus.
As the latest earnings results unfold, and analysts commence re-evaluating their stance on these auto stocks based on the latest financials and outlook, investors may be better positioned to discern which stock is the optimal buy.
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