Is It Toyota or Ford? (NYSE:TM),( NYSE:F)
As bad news keeps rolling for Toyota Motor Corporation (ADR) (NYSE:TM), it seems Ford Motor Company (NYSE:F) may be on the mend. If you had to pick one for investment, Ford may be a better buy. It is time to compare the two.
Mark Riddix tells us Ford has some impressive new automobiles and the company’s financial position is improving. The stock is trading at a 9.5 multiple with analysts looking for earnings of $1.41 per share for 2011. The low estimate for 2011 is 99 cents and the highest is $2.07. Sales are expected to rise 35% over the next 5 years and shares appear cheap on a PEG basis. The one negative for Ford is that the company still has a huge debt burden unlike General Motors.
Compare that with Toyota’s financials. Toyota is trading at nearly $80 per share with an average estimated EPS of $1.14 per share for 2011. That puts a multiple over 70 on the stock. How confident are analysts in Toyota’s earnings? Not very. The low end estimate is a loss of 53 cents and the highest estimate is $2.80 per share. Sales growth is projected at 62% over the next five years. Toyota can only discount its automobiles so much. They have been sacrificing profit margin in order to sell vehicles. Eventually if the company’s reputation for reliability and safety keeps taking a hit, buyers will look elsewhere no matter how deeply discounted the vehicles are for now.
Things just keep getting worse and worse for Toyota. On Friday Toyota Motor Corp. (TM) recalled 600,000 Sienna minivans due to rusting spare tire cables. This is just the latest in a series of recalls for the Japanese automaker.
In 2009 Toyota recalled millions of Toyota Camry and Lexus ES350 models for floor mat and brake problems. This year Toyota has recalled millions more cars for accelerator pedal problems and brake glitches. Investigators are looking into steering problems with the Corolla. Now Toyota has stopped selling its Lexus GX460 SUV because of safety concerns.