Financial Survey: Toyota Motor (NYSE:TM) and VOLKSWAGEN AG/ADR (NYSE:VWAGY)

Toyota Motor (NYSE:TM) and VOLKSWAGEN AG/ADR (OTCMKTS:VWAGY) are both large-cap auto/tires/trucks companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares Toyota Motor and VOLKSWAGEN AG/ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toyota Motor 6.25% 9.49% 3.66%
VOLKSWAGEN AG/ADR 4.85% 9.88% 2.52%

Institutional & Insider Ownership

0.7% of Toyota Motor shares are held by institutional investors. Comparatively, 0.1% of VOLKSWAGEN AG/ADR shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Toyota Motor has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, VOLKSWAGEN AG/ADR has a beta of 1.94, meaning that its stock price is 94% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Toyota Motor and VOLKSWAGEN AG/ADR, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toyota Motor 0 0 3 0 3.00
VOLKSWAGEN AG/ADR 0 1 1 0 2.50

Dividends

Toyota Motor pays an annual dividend of $3.89 per share and has a dividend yield of 3.0%. VOLKSWAGEN AG/ADR pays an annual dividend of $0.34 per share and has a dividend yield of 2.0%. Toyota Motor pays out 33.2% of its earnings in the form of a dividend. VOLKSWAGEN AG/ADR pays out 12.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Valuation and Earnings

This table compares Toyota Motor and VOLKSWAGEN AG/ADR’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Toyota Motor $274.48 billion 0.68 $16.95 billion $11.72 10.90
VOLKSWAGEN AG/ADR $278.54 billion 0.31 $14.33 billion $2.78 6.26

Toyota Motor has higher earnings, but lower revenue than VOLKSWAGEN AG/ADR. VOLKSWAGEN AG/ADR is trading at a lower price-to-earnings ratio than Toyota Motor, indicating that it is currently the more affordable of the two stocks.

Summary

Toyota Motor beats VOLKSWAGEN AG/ADR on 10 of the 14 factors compared between the two stocks.

Toyota Motor Company Profile

Toyota Motor Corporation designs, manufactures, assembles, and sells passenger vehicles, minivans and commercial vehicles, and related parts and accessories. It operates through Automotive, Financial Services, and All Other segments. The company offers hybrid cars under the Prius, Alphard, Vellfire, Sienta, RX-HV, Auris, Prius PHV, C-HR, LC, Camry, JPN TAXI, Avalon, Corolla HB, Crown, and Century names; fuel cell vehicles under the MIRAI and SORA names; and conventional engine vehicles, including subcompact and compact cars under the Corolla, Yaris, Vitz, Aygo, Prius C, Aqua, Passo, Roomy, Tank, Etios, Vios, AGYA, Rush, and Yaris iA names. It also provides mini-vehicles, passenger vehicles, commercial vehicles, and auto parts under the Toyota name; mid-size cars under the Camry, REIZ, and Avensis names; luxury cars under the Lexus, Avalon, and Crown names; Century limousines; sports cars under the 86, Scion FR-S, RC coupe, and LC names; and sport-utility vehicles under the Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser, and Land Cruiser names. In addition, the company offers pickup trucks under the Tacoma and Tundra names; minivans under the Alphard, Vellfire, Noah/Voxy, Esquire, Calya, Estima, Sienta, and Sienna names; large, medium, and small trucks; and large, medium, small, and micro-buses. Further, it provides financial services, such as retail financing and leasing, wholesale financing, insurance, and credit cards; and manufactures and sells prefabricated housing. Additionally, the company engages in the information technology related businesses comprising operation of a Web portal for automobile information known as GAZOO.com. It operates in Japan, North America, Europe, Asia, Central and South America, Oceania, Africa, and the Middle East. The company was founded in 1933 and is headquartered in Toyota, Japan.

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