Shares of Toyota Motor (NYSE: TM) rallied 4.8% on Wednesday as of 2:23 p.m. ET.
Toyota is the largest automaker in the world, so its stock hasn't escaped the slowdown in auto sales that came after the height of the pandemic. However, as today's results showed, it's navigating the difficult auto market far better than rivals.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
Toyota beats and announces EV investments
Unlike some of its electric vehicle (EV) and legacy auto rivals reporting this earnings season, Toyota's results were stronger than expected. Revenue for the third quarter of fiscal 2025, ended Dec. 31, 2024, was $80 billion and earnings per share was $1.07, well ahead of the $77 billion and $0.64 predicted by Wall Street analysts. While auto sales were down 4% in the quarter, this was relatively better than feared. Toyota also bumped up its profit outlook for the fiscal year ending in March to $31 billion, up from a prior outlook of $28 billion.
Relative to rivals, Toyota has been more deliberate in making the costly electric vehicle transition, instead focusing on hybrids. That appeared to pay off, as hybrid vehicles rose to 50% of sales, up from 40% last year.
Still, Toyota isn't shying away from electrification. Management also announced a new investment in battery production in North Carolina, which can supply both hybrids and battery-only electric vehicles. It's also developing an electric vehicle production plant in Shanghai, China, where it will produce Lexus-branded vehicles for the Chinese market. Of note, China has adopted all-electric vehicles to a much greater extent than the U.S. or Europe.
Toyota's pragmatism makes it a strong stock
Electric vehicle growth has slowed dramatically over the past two years, hurting companies like Tesla, which posted declines in revenue and profits last year, as well as legacy automakers aggressively attempting the transition.
However, Toyota's more deliberate approach, focusing on hybrids and only investing in electric vehicles where there is apparent demand, like China, seems to have been the better approach.
Still trading at a P/E ratio below 10, Toyota looks like a solid value stock.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $307,661!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,088!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $536,525!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of February 3, 2025
Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
