- Toyota Motor offers an attractive earnings yield and growing dividend.
- The automaker exhibits a high margin of safety in a low capital return industry.
- Toyota is arguably the most expensive stock in the now cheap automaker space.
- But we prefer to own the best company in a sector as opposed to trading the whole basket.
(Note: Subscribers to Main Street Value Investor Marketplace received the first look at this research).
Toyota Motor Corporation (NYSE:TM) is the world’s eighth-largest company by sales based on 2016 consolidated revenues per the Fortune Global 500. Interestingly, Toyota is tailgating seventh-ranked and fellow automaker, Volkswagen (OTCPK:VLKAY), by a slim $8 million of revenue.
Although TM’s valuation appears discounted to the market on the whole, the stock’s multiples are a bit loftier than its automaker peers. In our view, Toyota is the best-in-class automaker, and thus justifies the premium.