Toyota’s (TM) Q1 profit edged up 3% from the previous year on robust sales. Are automotive companies’ share prices currently undervalued?
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We continue to share analysts thoughts on automotive industry. Earlier today we published a comment of Marco Turatti. This time it's over to Orbex's David Kindley.
David Kindley (Orbex): In 2022, automakers worldwide were hit by a shortage of computer chips and other auto parts due to the global supply chain disruptions caused by the pandemic. In 2023, with supply chain bottlenecks finally easing, the world's biggest car makers have reported very strong Q1 earnings despite being faced with slowing global demand, persistent inflation, and higher raw-material costs.
Toyota Q1 earnings
David Kindley (Orbex): Specifically, Toyota’s (TM) Q1 profit edged up 3% from the previous year on robust sales. The automaker posted a sharp increase in sales for its first annual report offered under new Toyota CEO Koji Sato with $4 billion in quarterly net profit, up from $3.9 billion in the previous quarter. Quarterly sales also soared nearly 20% to $72 billion. The strong earnings came despite Toyota stating that soaring raw material costs also affected its bottom line.
Volkswagen Group in the first quarter of 2023
David Kindley (Orbex): Meanwhile, Volkswagen Group posted a solid start to the 2023 fiscal year, with operating profit before valuation effects from commodity hedging, increasing by 35% to $7.8 billion. VW’s first-quarter sales revenue also rose by 22% to a total of $83 billion, driven by a recovery in sales volumes in Europe and North America.
BMW AG Q1 earnings beat expectations
David Kindley (Orbex): In the case of BMW AG, the company’s first-quarter earnings also beat expectations, even though the company left its 2023 outlook unchanged due to softening global demand. Specifically, the carmaker reported an automotive earnings margin of 12.1% and pledged to boost earnings per share with a new $2.2 billion share buyback program.
David Kindley (Orbex): It’s important to note that as most automotive companies’ share prices are currently undervalued, they could present solid long-term “buy and hold” opportunities for traders and investors.
