Is Toyota (TM) stock a good buy?

Is Toyota (TM) stock a good buy?

➡️ This is a step-by-step stock review to determine if Toyota (TM) stock is a good buy. In this article, we’ll help you complete a 4M checklist. The 4Ms include the MOS (Margin of Safety), Meaning, Moat, and Management.

Table of Contents

  1. Toyota Company History
  2. MOS
  3. Meaning
  4. Moat
  5. Management
  6. News
  7. 4M Summary
  8. Is Toyota stock a good buy?

1. Toyota Company History

➡️ Goal: It’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition

  • Toyota Motor Corporation, commonly known as Toyota, is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi Prefecture, Japan.
  • The company’s first production vehicle, the Model AA, was launched in 1936, prior to the official establishment of Toyota Motor Company. For comparison purposes, the Ford Model T was launched 1908.
  • After proving the Model AA was a success, the company was founded on August 28, 1937, by Kiichiro Toyoda, the son of Sakichi Toyoda, who was a prominent inventor and entrepreneur in the textile machinery industry.
  • Kiichiro Toyoda established the Toyota Motor Company as a division of his father’s company, Toyoda Automatic Loom Works, with the aim of producing automobiles.
  • In 1937, Toyota Motor Company was spun off as a separate entity, and its first plant was established in Koromo (now Toyota City), Japan.
  • During World War II, Toyota shifted its focus to the production of trucks for the Japanese military, contributing to the war effort.
  • After the war, Toyota faced financial difficulties but received support from the Japanese government and implemented several cost-cutting measures to recover.
  • In the 1950s, Toyota began to establish itself as a quality-focused and export-oriented automaker. The company introduced the iconic Toyopet Crown sedan in 1955, which marked its entry into the international market.
  • Toyota’s first overseas production facility was established in Brazil in 1959, followed by plants in other countries such as the United States, Australia, and Thailand.
  • In 1966, Toyota launched the Corolla, which would become one of the best-selling cars worldwide, solidifying the company’s reputation for reliability and fuel efficiency.
  • The oil crisis of the 1970s prompted Toyota to prioritize the development of fuel-efficient vehicles.
  • Throughout the 1980s and 1990s, Toyota expanded its global presence and entered into partnerships with other automakers, including General Motors and Ford.
  • The company introduced the first-generation Toyota Prius, the world’s first mass-produced hybrid car, in 1997.
  • In 2008, Toyota surpassed General Motors as the world’s largest automaker in terms of annual vehicle production.
  • The company has also been exploring other mobility solutions, such as hydrogen fuel cell vehicles and connected car technologies.
  • Today, Toyota is known for its diverse vehicle lineup, which includes popular models like the Camry, Corolla, RAV4, and Tacoma. It remains one of the largest and most influential automotive manufacturers globally.

2. MOS (Margin of Safety)

➡️ Goal: When you look at a stock, the first step is to look at the financials. Fortunately, Tykr does this step for us automatically. A stock is either classified On Sale (Potential Buy), Watch (Hold), or Overpriced (Potential Sell). The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make. To determine if a stock is a definitive “Buy” or “Sell”, it’s wise to complete a 4M checklist. 

  • Summary:  On Sale
  • Score:  78/100
  • MOS:  51%
  • Share Price:  $145
  • Fair Value:  $252
  • Revenue: $31.3T JPN ($225B USD)

3. Meaning

How does Toyota make money?

➡️ Goal: It’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.

  • Toyota offers a wide range of vehicles, including passenger cars, trucks, SUVs, and hybrid vehicles, catering to different market segments and customer preferences.
  • Toyota also generates revenue through the sale of spare parts and accessories for its vehicles. These parts are sold through authorized dealerships and service centers.
  • Additionally, Toyota provides various automotive-related services, such as vehicle financing, leasing, and insurance. These services contribute to the company’s revenue stream. Toyota Financial Services (TFS) is the financial arm of Toyota and provides a range of financial products and services to customers and dealers. TFS earns revenue through interest and fees charged on loans, leases, and insurance premiums.
  • Toyota has subsidiary brands such as Lexus and Daihatsu, which contribute to its revenue. Lexus focuses on luxury vehicles, while Daihatsu produces small cars and compact vehicles primarily for the Japanese market.
  • Toyota also earns money through strategic partnerships and collaborations with other companies. For instance, it supplies hybrid technology to other automakers and manufactures vehicles under contract for certain brands.
  • Furthermore, Toyota has diversified its business operations by venturing into new areas such as mobility services. The company has invested in ride-hailing services, car-sharing platforms, and autonomous vehicle technology, aiming to generate revenue from these emerging sectors.
  • Toyota has been actively exploring and investing in alternative powertrain technologies, such as electric vehicles and hydrogen fuel cells. These efforts not only contribute to environmental sustainability but also open up new revenue streams in the future.
  • The company also earns income from its investments and subsidiaries in non-automotive sectors, such as robotics, housing, and information technology.

4. Moat

➡️ Goal: It’s important to understand who the competitors are and how their financials rank against this company. Try to find 5 other competitors to rank against based on Score. The best way to find competitors is to Google “XYZ competition” and replace XYZ with the company name. You can also go to Tykr and click on the “Similar Stocks” tab on each stock to see similar companies in the same industry.

Toyota (TM)

  • Summary:  On Sale
  • Score:  78/100
  • MOS:  51%
  • Share Price:  $145
  • Fair Value:  $252
  • Revenue: $31.3T JPN ($225B USD)

Top 5 Competitors of Toyota:

Volkswagen (VWAPY):

  • Summary:  Watch
  • Score:  84/100
  • MOS:  0%
  • Share Price: $13
  • Fair Value: $18
  • Revenue: $279B

Tesla (TSLA)

  • Summary:  On Sale
  • Score:  83/100
  • MOS:  55%
  • Share Price: $221
  • Fair Value: $372
  • Revenue:$81B

Ford (F)

  • Summary:  Overpriced
  • Score:  22/100
  • MOS:  45%
  • Share Price: $12
  • Fair Value: $21
  • Revenue: $158B

General Motors (GM)

  • Summary:  Watch
  • Score:  67/100
  • MOS:  0%
  • Share Price: $35
  • Fair Value: $42
  • Revenue: $156B

Honda (HMC)

  • Summary:  Watch
  • Score:  72/100
  • MOS:  0%
  • Share Price: $30
  • Fair Value: $25
  • Revenue: $14.5T JPN ($104B USD)

5. Management

➡️ Goal: It’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. As investors, we should invest in CEOs with humility and integrity. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.

Koji Sato was named the new CEO in April of 2023. He originally joined Toyota in 1992 and served in roles including Platform Manager, Chief Engineer, Executive General Manager, Supervision of Development at Lexus, EVP at Lexus, President, COO, and Chief Branding Officer. Overall, he has a lot of great experience at Toyota and is a perfect fit for CEO.

  • The Glassdoor Rating is 3.9.
  • The Glassdoor CEO Approval Rating is 79%.

6. News

➡️ Goal: It’s important to highlight important company-specific news as well as industry-specific news over the last month and year. We don’t need daily news on a company to make buy or sell decisions because we’re investors, not traders. Overall, we want sufficient news to understand where a company and industry are heading over the next year or few years. 

Top Selling Toyota Vehicles

This article from lists the top 3 all-time top-selling Toyota vehicles.

  • #3 – Toyota Land Cruiser – First sold in 1958. Has gone through 12 generations. 10 million units sold. Production ended in 2021 but will likely return in 2024.
  • #2 – Toyota Camry – First sold in 1983. Has gone through 8 generations. 12.4 million units sold.
  • #1 – Toyota Corolla – First sold in 1966. Has gone through 11 generations. 43 million units sold.

Fun facts on mileage


This article from lists over 60 Toyota manufacturing plants around the globe including Japan, Argentina, Brazil, South Africa, Austria, France, China, India, Malaysia, US, Australia, and New Zealand. For comparison purposes…

  • GM has over 100 plants
  • VW has over 70
  • Ford has over 60
  • Tesla has 6


This article from states that Toyota plans to release 10 EV models and sell 1.5 million EV units by 2026.

This article from states that 2.2% of the world population in 2023 drives an EV. This shows significant upside potential for most EV manufacturers.

Why is Toyota behind other manufacturers? As stated by Toyota’s Chief Scientist Gill Pratt in, “Having a blend of gas-powered and hybrid cars on the roads leads to less overall emissions compared to electric-only. This forms the basis of Toyota’s reluctance to go fully electric. The company believes that adopting a diverse powertrain instead of pure electric is more viable. They call it a balanced approach.”

Speaking of a balanced approach, Toyota will focus on four types of vehicles:

  1. Gas
  2. Hybrid
  3. Electric
  4. Hydrogen


Below are two reviews on the Toyota Mirai which officially launched in 2014 and sold over 21,000 units to date.

There are 2 ways to create hydrogen

  1. Steam-methane reforming – In steam-methane reforming, high-temperature steam (1,300°F to 1,800°F) under 3–25 bar pressure (1 bar = 14.5 pounds per square inch) reacts with methane to produce hydrogen, carbon monoxide, and a relatively small amount of carbon dioxide.
  2. Electrolysis – Electrolysis is a process that splits hydrogen from water using an electric current. The electrical power comes from power plants.

Review 1: Scotty Kilmer – See the review on Youtube titled “Here’s Why Toyota’s New Hydrogen Car is the Future (Goodbye Tesla)


  • Fill up your hydrogen tank just like a gas tank.
  • Just as safe as gas.
  • Doesn’t explode (like people think it will).
  • Doesn’t catch fire (like EVs).


  • $60K.
  • Only 47 refueling stations in California.
  • Only available in California and Hawaii.

Review 2: The Fast Lane Car – See the review on Youtube titled “Living With A Hydrogen Car (Toyota Mirai) Did NOT Go As Expected


  • Complete silence like an EV.
  • Instant torque like EVs. No gears like in a combustion engine.
  • The Interior feels like a Lexus. Very luxury.
  • At the moment, when you buy a new Marai, you get $15K credit card for hydrogen.


  • Only 182hp.
  • Only 47 refueling stations in California.
  • Because of limited stations, you have to wait in line.
  • About the same price as gasoline.
  • The refueling process is slow. 4 cars in line required 30-minute wait. 7.5 minutes per car.
  • Hydrogen nozzles are cold which means they can freeze to the car.
  • Owners HATE the refueling process.
  • Stations can run out of hydrogen.

7. 4M Summary

➡️ Goal: All of our homework on this company leads up to the 4M checklist. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the business, the competition, and the management. If all 4Ms pass, we should have high confidence in buying this stock.

MOS: The financials are very good. The score of 78/100 shows us this company is operating well and the MOS of 51% shows there is some upside potential.

Meaning: The focus on four types of vehicles is a good strategy. It’s important to highlight that Toyota wants to capitalize on not just EVs, but hydrogen as well.

Moat: There are a lot of strong competitors in this industry including Tesla, VW, Ford, GM, and Honda. If I were an investor in any of these auto manufacturers, including Toyota, I would be afraid. 

Management: Toyota is a well-run company and the CEO, Koji Sato, is the perfect fit to take over as CEO.

8. Is Toyota stock a good buy?

If you’re looking for a stock to diversify your portfolio and potentially match the S&P 500, Toyota may be a great fit for your portfolio. However, this will most likely not return large profits like Tesla has over the past few years. Speaking of Tesla, for those of you who invest in Tesla, you may want to keep a close eye on that stock. As Toyota starts to take market share, it may be time to sell your Tesla stock.

The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.

If you found this stock review interesting, you may also like this review on Expeditors.