SUBARU CORP/ADR (NYSE: TM) and Toyota Motor (NYSE:TM) are both large-cap auto/tires/trucks companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Institutional & Insider Ownership

0.2% of SUBARU CORP/ADR shares are owned by institutional investors. Comparatively, 0.7% of Toyota Motor shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for SUBARU CORP/ADR and Toyota Motor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SUBARU CORP/ADR 0 0 0 0 N/A
Toyota Motor 0 3 4 0 2.57

Toyota Motor has a consensus target price of $130.00, indicating a potential upside of 5.45%. Given Toyota Motor’s higher possible upside, analysts plainly believe Toyota Motor is more favorable than SUBARU CORP/ADR.

Risk & Volatility

SUBARU CORP/ADR has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Toyota Motor has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500.

Profitability

This table compares SUBARU CORP/ADR and Toyota Motor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SUBARU CORP/ADR 3.77% 13.92% 7.51%
Toyota Motor 8.52% 13.25% 5.07%

Earnings and Valuation

This table compares SUBARU CORP/ADR and Toyota Motor’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SUBARU CORP/ADR $30.75 billion 0.75 $1.98 billion $1.79 8.42
Toyota Motor $265.30 billion 0.68 $22.45 billion $15.04 8.20

Toyota Motor has higher revenue and earnings than SUBARU CORP/ADR. Toyota Motor is trading at a lower price-to-earnings ratio than SUBARU CORP/ADR, indicating that it is currently the more affordable of the two stocks.

Dividends

SUBARU CORP/ADR pays an annual dividend of $0.49 per share and has a dividend yield of 3.3%. Toyota Motor pays an annual dividend of $3.89 per share and has a dividend yield of 3.2%. SUBARU CORP/ADR pays out 27.4% of its earnings in the form of a dividend. Toyota Motor pays out 25.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Toyota Motor beats SUBARU CORP/ADR on 9 of the 14 factors compared between the two stocks.

About SUBARU CORP/ADR

Subaru Corporation manufactures and sells automobiles and related products in Japan and internationally. The company operates through three segments: Automotive, Aerospace, and Other. It manufactures, repairs, and sells passenger cars and their components under the Subaru brand; airplanes, aerospace-related machinery, and their components; and generators, engine-equipped machinery, agricultural machinery, construction machinery, and other machine tools, as well as their components. It also engages in real estate lease, etc. The company was formerly known as Fuji Heavy Industries Ltd. and changed its name to Subaru Corporation on April 1, 2017. Subaru Corporation was founded in 1917 and is headquartered in Tokyo, Japan.

About Toyota Motor

Toyota Motor Corporation designs, manufactures, assembles, and sells passenger vehicles, minivans and commercial vehicles, and related parts and accessories. It operates through Automotive, Financial Services, and All Other segments. The company offers hybrid cars under the Prius, Alphard, Vellfire, Sienta, RX-HV, Auris, Prius PHV, C-HR, LC, Camry, JPN TAXI, Avalon, Corolla HB, Crown, and Century names; fuel cell vehicles under the MIRAI and SORA names; and conventional engine vehicles, including subcompact and compact cars under the Corolla, Yaris, Vitz, Aygo, Prius C, Aqua, Passo, Roomy, Tank, Etios, Vios, AGYA, Rush, and Yaris iA names. It also provides mini-vehicles, passenger vehicles, commercial vehicles, and auto parts under the Toyota name; mid-size cars under the Camry, REIZ, and Avensis names; luxury cars under the Lexus, Avalon, and Crown names; Century limousines; sports cars under the 86, Scion FR-S, RC coupe, and LC names; and sport-utility vehicles under the Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser, and Land Cruiser names. In addition, the company offers pickup trucks under the Tacoma and Tundra names; minivans under the Alphard, Vellfire, Noah/Voxy, Esquire, Calya, Estima, Sienta, and Sienna names; large, medium, and small trucks; and large, medium, small, and micro-buses. Further, it provides financial services, such as retail financing and leasing, wholesale financing, insurance, and credit cards; and manufactures and sells prefabricated housing. Additionally, the company engages in the information technology related businesses comprising operation of a Web portal for automobile information known as GAZOO.com. It operates in Japan, North America, Europe, Asia, Central and South America, Oceania, Africa, and the Middle East. The company was founded in 1933 and is headquartered in Toyota, Japan.

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