Imagine you are an investor and someone presents you with the following scenario: There's a company with a leading brand in a segment, but production has been crippled by circumstances outside of their control.
The currency where they manufacture is surging which is chewing into profits and their brand has been tarnished with major recalls.
This company is losing share in the world's top market due to stronger competition, oh and it can't give a business outlook due to a number of uncertainties.
As an investor, what does this profile say to you?
Does it make you want to step up and plunk down ten grand to buy shares? Yeah, that's what I thought. Most of us would say no.
And yet, this scenario which describes Toyota, does not spook investors in the Japanese automaker. To the contrary, shares of Toyota have held up and continue to hold up despite the growing list of headwinds.
Look at the p/e ratios (for trailing earnings) for some of the worlds largest automakers:
- Nissan 23.07
- Toyota 20.59
- Honda 10.41
- Ford 9.10
- GM 7.57
Why are investors sticking with Toyota?