Is Toyota Motor a Promising Long-Term Investment?

PHOTO CREDIT: Toyota Motor

OVERVIEW

Why You Should?

  1. Toyota offers products for all kinds of consumers. They offer the Toyota and Daihatsu branded cars for people who need an economical and consistent way to get from Point A to Point B. They offer Lexus and Subaru brands to consumers who look for more luxurious and powerful products. This wide range of products has made them one of the largest auto manufacturers in the world.
  2. Toyota sells its products in over 170 countries. This has allowed them to strongly develop and increase their market share in these countries and further increase their reach. This along with the wide range of products that they sell have made them one of the world's largest auto manufacturers. This will benefit their long-term growth goals.
  3. Toyota has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This helps it build a stronger balance sheet and help them grow to achieve their long term growth goals. In the financial year of 2019, the company reported revenues of around 275.3 billion and profits of around 23.3 billion. They reported higher revenues in 2019 at 289.1 billion but lower profits of around 17.98 billion dollars.
PHOTO CREDIT: Yahoo Finance (GRAPH IN JAPANESE YEN)

Why You Should Not?

  1. The COVID-19 Pandemic has harmed the sales of vehicles all over the world. Sales numbers for Toyota were down double digits for the quarter. This might harm their future growth as they are taking on more debt and weakening their balance sheet.
  2. Toyota has been negatively impacted due to trade tensions. The current administration has increased the price of raw materials to make cars as well as an increase in import fees for foreign-made cars. This will increase operating costs and prices and will negatively be impacted due to these tensions.
  3. Toyota is currently experimenting with Hydrogen technology and other technologies while companies like Tesla and NIO are crushing it. If Toyota does not start to provide cheap and high-quality EV products, Toyota will see slowing sales growth and other metrics decrease as consumers and governments look to take on the impacts of climate change.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.