Toyota's Stock Surges on Reported Plans to Raise Its Return on Equity

Investopedia

27 Dec 2024

Key Takeaways

U.S.-traded shares of Toyota Motor surged Thursday following a report from Nikkei that the carmaker is aiming for a 20% return on equity.
Analysts were reportedly anticipating an 11% return on equity this fiscal year.
The news comes days after an announcement that two of Toyota's rivals, Honda and Nissan, are planning on merging.

Toyota Motor's (TM) U.S.-listed shares soared Thursday following a report that the carmaker is looking to double its target return on equity (ROE).

The Japanese auto giant is planning to raised its ROE to 20%, according to a report by Japan’s Nikkei, roughly double what analysts were anticipating for this fiscal year.

Bloomberg later reported a spokesperson for the company said Toyota doesn’t have an explicit target or deadline to reach that figure.

The news comes just days after the Japanese auto industry was roiled by an announcement from Honda (HMC) and Nissan that the two companies plan to merge. Moody’s analysts applauded the move, arguing that it would be “credit positive” if done properly. However, former Nissan CEO Carlos Ghosn warned in an interview that Nissan could face cost-cutting “carnage” in such an arrangement.

Toyota shares were up over 8% at $196.22 in intraday trading Thursday, and have gained close to 7% for 2024 so far.

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