Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

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Is Toyota Making Money?

The Toyota Motor Corp (NYSE: TM) is the largest automaker but is it making money?

Statista estimates, Toyota sold 9.6 million vehicles in the fiscal year ending in March 2019. Meanwhile, The Daily Kanban estimates Toyota’s year-to-year sales grew by 4.3% between January/February 2018 and January/February 2019. However, The Daily Kanban estimates Toyota’s production for that period at 10.6 million vehicles slightly ahead of Statista’s estimate.

Either way, Toyota is building a lot of cars and its production is increasing. However, Toyota is still the world’s largest second largest carmarker with global sales of 10.521 million in the year ending in March 2019, The Largest.Org estimates. Consequently, Toyota’s archival Volkswagen AG (OTC: VWAPY) is still the number one automaker with global sales of 10.831 million in the last fiscal year.

Toyota is making a lot of Money

Toyota is making a lot of money from all those cars. For instance, the company reported an annual gross profit of $49.80 billion for the fiscal year ending 31 March 2019.

Moreover, Toyota reports an operating income of $22.432 billion, and a net income of $17.17 billion for the last fiscal year. Toyota earned those numbers on annual revenues of $274.779 billion. Additionally those revenues grew at a rate of 6.92% in the last fiscal year.

Finally, Toyota generates a lot of cash from its operations. There was a free cash flow of $13.438 billion and an operating cash flow of $34.242 billion for the last fiscal year. However, Toyota lost money on financing with a negative financing cash flow of -$4.917 billion in that fiscal year.

Toyota is a Cash-Rich Company

Impressively, Toyota brought in a lot of cash in 2018. For instance, Toyota had $42.737 billion in cash and equivalents and $10.247 billion in short-term investments on 31 March 2019.

Impressively, Toyota brought in a lot of cash in 2018. For instance, Toyota had $42.737 billion in cash and equivalents and $10.247 billion in short-term investments on 31 March 2019.

Thus, Toyota had $52.939 billion in the bank at the end of the last fiscal year. That was enough to buy Ford (NYSE: F) which had a market cap of $39.98 billion on 23 July 2019. In addition, Toyota has enough cash in the bank to buy Tesla Motors (NASDAQ: TSLA) which had a market cap of $44.42 billion on 23 July 2019.

Bizarrely, Tesla’s stock was trading at $258.18 a share on 23 July 2019, while Toyota shares sold for $260.17 Therefore, Mr. Market is definitely insane when he prices auto stocks.

Can Toyota Dominate Electric Vehicles

Elon Musk should worry because Toyota is making a bigger push into the electric vehicle market. In particular, Toyota will partner with BYD to develop all electric cars for the China market.

Planned vehicles for the People’s Republic include a low-floor SUV and all electric sedans, Eletrek reports. Additionally, Toyota and Contemporary Amperex Technology Co., Limited (CATL); another Chinese firm, will make batteries.

Interestingly, BYD’s gigafactory is 20 times the size of Tesla’s. Eletrek claims BYD’s battery factory can make enough batteries in a year to contain 20 billion watts of electricity. In contrast, Elon Musk’s Gigafctory 1 in Nevada can only make one gigawatts worth of batteries a year. That’s enough batteries to hold one billion watts of electricity.

BYD builds electric cars, trucks, and buses in China. In addition, BYD and Daimler AG (DE: DAI) build cars in China under the Denza brand name.

Is Toyota Behind other Automakers in Electric Vehicles?

Toyota’s other electric plans include an electric van called the Accessible People Mover (APM) that will carry people in the 2020 Summer Olympics, reports. Notably, the APM could theoretically carry six passengers to their seats in an Olympic venue in Tokyo.

The APM’s purpose is to haul handicapped people, the elderly, small children, the obese, and others who have a hard time moving around to their seats. Since the National Institute of Diabetes and Digestive and Kidney Diseases estimates that one-in-three in Americans is obese, there could be a huge market for the APM.

Meanwhile, Toyota plans to launch its first all-electric vehicle in 2020, Electrek claims. In detail, Toyota plans three short-range electric vehicles that look like Daimler smart cars or golf carts. Thus, Toyota looks behind the curve in electric vehicles.

Consequently, Toyota is behind companies like Tesla and Tata Motors (NYSE: TTM) that make real cars run by electric. However, there are pictures of a real Toyota electric that it could sell in Japan next year.

Can NVIDIA help Toyota Make Money with Autonomous Vehicles?

Unlike, Tesla and Tata, Toyota is maintaining silence about its self-driving vehicle experiments. Interestingly, Toyota is turning to one of the world’s leaders in artificial intelligence; NVIDIA (NASDAQ: NVIDIA) for help to develop autonomous vehicles.

Toyota will use NVIDIA’s DRIVE Scalable AI Platform to train and test neural networks for autonomous driving, TechCrunch reports. In addition, Toyota is the first customer for NVIDIA’s Drive Constellation, a simulator that lets developers test autonomous vehicles in a virtual world.

Interestingly, Toyota operates two development teams for autonomous vehicles, TRI-AD and the Toyota Research Institute in the United States. Each entity is taking a different approach to self-driving vehicle development, Fortune reports. Both organizations work closely with NVIDIA.

How Advanced are Toyota’s Self-Driving Vehicles?

However, there is no indication either Toyota or NVIDIA has achieved a full-self-driving (FSD) capability. Although, Toyota is planning a full FSD feature it calls Chauffeur. Importantly, there appear to be no large-scale tests of Toyota autonomous vehicles taking place.

Meanwhile, Alphabet’s (NASDAQ: GOOG) is testing dozens of autonomous vehicles in Phoenix and experimenting with rideshare using self-driving vans. Notably, Toyota is working with Waymo in an attempt to develop standards for self-driving vehicles.

The hope is to develop a standard operating system for self-driving vehicles similar to Alphabet’s (NASDAQ: GOOGL) Android operating system for mobile phones, Nikkei Asian Review reports. Toyota is also invested in Uber (NASDAQ: UBER) which has yet another autonomous vehicle project.

Moreover, Toyota is developing another autonomous vehicle called CES with Amazon (NASDAQ: AMZN), Nikkei Asian Review reveals. The CES is an automated van that Amazon could use for delivery automated stores.

Therefore, Toyota is diversifying its autonomous vehicle efforts and hoping one will work. This strategy can minimize risks, but it could be costly and confusing. Particularly, if Toyota ends up with several autonomous vehicle systems that do not work.

However, Toyota is accumulating a lot of data about autonomous vehicles and gaining a great deal of experience in the field. That experience, might give Toyota the edge in autonomous vehicle deployment.

Toyota is a Great Income Stock

Thus, Ford is the value in auto stocks but Toyota is a great income stock. In fact, Toyota investors enjoyed an annualized payout of $4.38, a dividend yield of 3.32%, and a payout ratio of 30.4% on 23 July 2019.

Toyota paid a twice yearly dividend of $1.944 on 4 June 2019. That dividend grew from $1.558 paid on 7 December 2018. Currently, gives Toyota one year of dividend growth.

Therefore, if you are looking for an income stock with Toyota growth potential in automobiles Toyota is it. This car maker pays a great dividend, Mr. Market fairly prices it, and it has growing revenues and sales. Finally, Toyota, could experience growth for many years to come because of its interesting investments and strategic alliances in self-driving vehicles and electric vehicles.