• Market expectations are for a recovery in Uniform ROA, but management has concerns about growth, guidance, and costs 

    05 Jul 2018

    Toyota Motor Corporation (7203:JPN) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 19.8x Uniform P/E. At these levels, the market has muted expectations for the firm, while management has concerns about sales, operating income, and guidance.

    Specifically, management may be downplaying concerns about their declining consolidated vehicle sales, and may be concerned about their operating income, driven by concerns about their ability to continue offsetting higher raw material costs through their cost-reduction efforts. Additionally, they may be concerned about the impact of their sales incentives on operating income, and may lack confidence in their ability to meet their North American growth guidance.