Toyota (TM) Stock | Long Term Analysis | Overvalued or Undervalued |

Transcript (auto-generated)

Alright hello and welcome everybody to another stock analysis video where today we’re talking about Toyota ticker symbol TM now this company is traded on the new york stock exchange this is a company that we talked about at least in the past i want to kind of remake that analysis and talk about what’s going on with the company currently how it’s being more innovative than other car companies and other things like that so we’re gonna talk about the long-term analysis of this company so we’re talking about the growth of the company we’re gonna talk about the intrinsic value of the stock also the book value of the company the price tearings and all sorts of value technicals that we like to get into in our videos anyway if you like this video please do like subscribe if this is about our channel and let’s get this content out to more people so that more people can understand how toyota works and also the socks that we talk about work as well on our channel anyway thank you so much for watching without further ado let’s get started now as we know toyota is known for all sorts of vehicles they were founded in 1937 and this company has been just around for many years this company makes really good and reliable cars and that’s what they’re known for they’re similar to honda in the way they make very good reliable cars and so a lot of people in the general population like to buy their cars because they’re not too expensive and they’re also quite reliable so this goes for a lot of their vehicles as well the hybrid vehicles are also known to be very reliable the company is done very well with making these hybrid vehicles and they’ve had them going for quite a long period of time the priest was developed really i think in 1997 or 1998 the priests for example was way ahead of its time so it had a lot of fancy features so for example for the second gen prius that second gen prius actually has bluetooth a backup camera keyless entry and all sorts of very neat features that come in a base model prius so this is something that definitely is pretty interesting and not the bluetooth doesn’t come in the base model necessarily but the point is that the company still does very well for not at least not marking up their cars too much that they’re not affordable and so compared to let’s say tesla people can go and buy a prius or another hybrid vehicle or even a tech vehicle or maybe a completely electric vehicle from toyota and understand that it’s going to be a reliable vehicle and also it’ll be a car that is going to be full of features and not too expensive so i think that this is something that together has over other vehicles i consider this company to be one of the more innovative car companies in fact i consider toyota to be second to tesla and how innovative they are in developing electric vehicles now here’s the deal with the intrinsic value of the stock we can see that the company currently has based off of the projected free cash flow mall the intrinsic value is hundred eleven dollars a share now this is below the company’s current trading value of 175 dollars a share which which would suggest that the company is undervalued however this is a not a very good way of tackling you to value for this company specifically so the company still has plenty of assets to support the company’s trading value so it’s got a high stockholders equity but the company’s free cash flow is negative now this could just be that the information is not given correctly on this website here google focus which we have linked in description below but unfortunately i don’t find this interesting value to be exactly accurate this company has a book value of currently 156.84 a share so this is well above the company’s current intrinsic value and this is close to the company’s trading value with a really high book value at around 150 a share compared to the trading value of 175 dollars a share that was suggested the company for a car company specifically is likely at least fair value because the company’s book value is so close with a higher book value this helps to increase and hold the intrinsic value because if the intrinsic value is calculated based off the earnings and also the book value if the intrinsic value fluctuates even dramatically then the company’s book value will support the intrinsic value and help to at least prevent a dramatic decline below the company’s value so this is very important and i think that with the company having a higher book value this will help to decrease volatility and also help to sustain uh growth for the company’s trading value in the long term now based off of the company’s current assets the company’s shareholder equity has been increasing year over year and so this is really nice the company currently has a shared equity of 227 billion dollars the shield equity is actually the asset spice that they have at the company so since this company has currently quite a bit of assets despite the fact that the companies they have been increasing the debt has not been increasing as fast as the assets so the assets have actually been increasing faster than the debt therefore the shareholder equity increases so this is very important when the company’s shared equity increases since the book value is the shareholder equity divided by the outstanding shares in the market as the shareholder equity increases this helps to increase the book value this helps to also increase the intrinsic value which then in turn helps to increase the trading value now of course if someone is issuing more shares if the outstanding shares increase then that can change things and that may not allow the book value to increase when the shared equity increases however fortunately for us toyota is actually buying back their own stock which we’ll talk about in a moment we can take a look at the company’s net income but we consider that the company currently brings in about eight billion dollars every quarter now that’s a lot of money so the company really does end up bringing in maybe about 24 25 billion dollars every year which is plenty of money this is net income so this is after paying taxes and workers and fees or anything like that this is simply the amount of money that the company is bringing in now so this is definitely something that i want to take a look at and show you that the company really does make plenty of money so therefore we can also take a look at the priced earnings and we can see that the company’s price earnings is currently at about nine or ten so with that in mind this is because the company’s earnings have gone up dramatically this year and so despite the company’s current trading value increasing dramatically the company actually does have a really low priced earnings it consistently trades at a low price during as well this is not uncommon for the company to trade at price earnings of around nine they’ve done this in the past if we could look back in 2015 2014 all that kind of stuff the company is still very commonly trading at low priced earnings so at some point that may change um but how however the company has not traded that price earnings in quite a long period of time so i doubt it will change anytime soon so the company currently has announced per share that’s pretty high and i don’t i can’t predict exactly what’s going to happen with this company but from a value investor’s perspective currently the company has a price durings that is low and so if the company’s earnings if you think the company’s earnings are going to drop in the next year then essentially you would expect the company’s trade value to drop and it will likely follow the price to earnings so i’d really say that the company’s value is based off of primarily this price earnings at this point and not really the book value and certainly not the intrinsic value we can also look at the outside shares in the market we can see that the company has been decreasing the outstanding shares of the market consistently and very often so this company has been buying back their own stock a lot they recently decided to offer a new buyback program and this is where they are now able to start repurchasing their own stock at a relatively quick rate now the company has been willing to buy back its own stock a lot recently which we can see here based off the outstanding shares of the market decreasing we can see that the company is currently at least go it’s gone from one point six billion ounce shares in the market to about 1.4 billion this is because the company is once again buy mac their own stock they have recently been doing this and so this is allowed the company’s de outside shares decrease which helps to in turn increase the book value and also increase the trading value so this is very important when a company buys back their in stock they’re decreasing the outs and the shares this allows the assets to be distributed across less shares so if there’s less shareholders likely the assets are going to be distributed across less people and so this is allowing companies shares to be worth more so that’s very important this company has been definitely willing to do that recently now currently we can see this company also offers a semi-annual dividend they offer essentially a 2.4 dividend so that’s not very high but for the car industry that is pretty reasonable and so at this point the company is offering it the 2.4 percent demand yield and they offered 2.18 in the most recent dividend payment now this is after the company has made a lot of money so that’s why the company’s dividend is actually very high for the moment so that’s something that we should definitely take a note of that the company has paid more money than they have in the past because it’s really based off a percentage of the growth of the earnings and so therefore with the company having made more money they’re paying out a higher dividend now if the earnings all the sudden drop then they will pay a lower dividend so just be prepared to understand that the company’s demand may really be more around two percent instead of 2.4 and that they just paid out a lot of money recently just due the fact that the companies made a lot of money recently so definitely keep that in mind in the long term though i do expect this company to be able to consistently make more and more money they should be pre-inflation protected too as they are able to consistently increase their pricing of their cars just if they need to and people still need cars they still need transportation and together offers a viable option to the average common consumer who would like to buy a vehicle so this is very important and i think that toyota is going to do very well in the long term for that reason with them offering good reliable cars they also have been able to at least consistently grow in earnings at a relatively slow pace but the company has been at least bringing plenty of money so i think their dividend is going to be safe and so for a dividend stock this might be nice however i think there’s better demand stocks but i think that this company also offers some pretty good growth i’m not sure if i could say this a really good growth stock because they’re not very quick in growing in earnings and i’m not sure if i consider the stock a value stock either but i do think that this company is currently fair valued this is just my opinion i’m not a financial advisor and this is also not financial advice so please do your own research for investing anyway thank you so much for watching if you like this video please do like subscribe but this is our channel please come down below and tell us what you think about this company we’ll try to get back to you anyway thanks again for watching and have a great day bye