Adient (ADNT) versus Toyota Motor (TM) Critical Survey

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

Earnings & Valuation

This table compares Adient and Toyota Motor’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Adient $16.21 billion 0.45 $877.00 million $9.47 8.26
Toyota Motor $255.27 billion 0.72 $17.03 billion $11.65 10.56

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

Profitability

This table compares Adient and Toyota Motor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Adient 5.47% 22.48% 7.35%
Toyota Motor 6.82% 10.50% 3.93%

Institutional & Insider Ownership

92.7% of Adient shares are owned by institutional investors. Comparatively, 0.8% of Toyota Motor shares are owned by institutional investors. 0.1% of Adient shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Adient pays an annual dividend of $1.10 per share and has a dividend yield of 1.4%. Toyota Motor pays an annual dividend of $3.56 per share and has a dividend yield of 2.9%. Adient pays out 11.6% of its earnings in the form of a dividend. Toyota Motor pays out 30.6% 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.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Adient and Toyota Motor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Adient 1 3 3 0 2.29
Toyota Motor 1 2 2 0 2.20

Adient presently has a consensus price target of $76.43, suggesting a potential downside of 2.34%. Toyota Motor has a consensus price target of $112.11, suggesting a potential downside of 8.83%. Given Adient’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Adient is more favorable than Toyota Motor.

Summary

Adient beats Toyota Motor on 8 of the 15 factors compared between the two stocks.

About Adient

Adient plc, formerly Adient Limited, is an automotive seating supplier. The Company designs, manufactures and markets a range of seating systems and components for passenger cars, commercial vehicles, and light trucks, including vans, pick-up trucks, and sport/crossover utility vehicles. The Company operates through two segments: Seating and Interiors. The Seating segment produces automotive seat metal structures, and mechanisms, foam, trim, fabric and complete seat systems. The Interiors segment produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products. The Company also supplies various seating systems to the international motorsports industry through its RECARO brand of products. It operates approximately 230 manufacturing or assembly facilities, with operations in over 30 countries. Its technologies focus on offering automotive seating solutions in a range of areas, including frames, armrests and fabrics.

About Toyota Motor

Toyota Motor Corporation (Toyota) conducts business in the automotive industry. The Company also conducts business in finance and other industries. The Company’s segments include Automotive, Financial Services and All Other. Toyota sells its vehicles in approximately 190 countries and regions. Toyota’s markets for its automobiles are Japan, North America, Europe and Asia. The Company’s Automotive segment includes the design, manufacture, assembly and sale of passenger vehicles, minivans and commercial vehicles, such as trucks and related parts and accessories. The Company’s Financial Services segment consists of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles. The All Other segment includes the design, manufacturing and sale of housing, telecommunications and other businesses. Its information technology related businesses include a Web portal for automobile information called GAZOO.com.

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