The Zacks Analyst Blog Highlights: Toyota Motor, Morgan Stanley and Honda Motor - Press Releases
For Immediate Release
Chicago, IL – March 02, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Toyota Motor Corp. (TM-Free Report), Morgan Stanley (MS-Free Report) and Honda Motor Co., Ltd. (HMC-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday’s Analyst Blog:
Japan ex-Recession Puts These Auto Stocks in Focus
The record run of Japan’s Nikkei is hardly unabated as it keeps extending its rally to 15-year highs. The rally is obvious given the handful of positive economic indicators that the economy is celebrating. Though GDP growth was lower than expected, the economy managed to pull out of recession in the three months through December.
GDP growth was boosted by exports, and luckily again the country’s annual exports in January increased the most since late 2013. Meanwhile, a Reuters poll showed that Japanese business sentiment improved in February. Also, The Bank of Japan (BoJ) noted that Japan's economy is in a “moderate recovery trend.”
Japan has been making headlines since the latter half of 2014. Last year, the BoJ governor Haruhiko Kuroda had stepped up the ambitious program launched by Prime Minister Shinzo Abe to resuscitate the Japanese economy. The BoJ had announced that it will step up asset purchases to 80 trillion yen on annual basis. (Read: What Bank of Japan Stimulus Means for U.S. Stocks)
Later, Abe had called for a snap election in mid-December -- two years ahead of the scheduled election. Also, Abe delayed plans of hiking the unpopular sales tax. (Read: Japan Stocks in Focus as Abe Calls for Snap Election)
Japan Comes Out of Recession, Exports Jump
Japan posted gross domestic product growth of 2.2% in the final quarter of 2014, which was lower than economists’ expectation of a 3.6% increase. Nonetheless, what is crucial is that the economy is out of recession and some experts opined that the worst is over for the country in the short term.
The world's third-largest economy had slipped into a technical recession in the third quarter last year. The economy shrank 1.6% annually in the third quarter after plunging 7.3% in the second quarter. The news of recession had sparked off a heavy sell-off in the Japanese shares.
Exports jumped 2.7% in fourth quarter. This was the largest increase in four quarters. The robust gain was indicative of the positive impact of weak yen. Exporters of cars and electronics particularly have been enjoying high profits banking on weak yen.
Exports to China made 1.27 trillion yen in December, the highest monthly export amount since Dec 2010. Exports to the U.S., Japan’s biggest export destination, were 1.4 trillion yen, the best month since 2007.
In latest development, Japan’s annual exports in January also increased. Data from the Ministry of Finance showed exports jumped 17% year over year, again boosted by car shipment to the US and exports of electronic parts to Asia. Exports to US and Asia jumped 16.5% and 22.7% year on year, respectively. It was the fifth consecutive month of gains.
Monetary Policy Unchanged
The improving exports condition, among other factors, was also cited by the BoJ to be indicative of Japan’s economy being in a “moderate recovery trend.” Improved corporate investment and industrial production were the other positive signs. Meanwhile, the plunge in real estate investment is beginning to end.
The statements came at the end of the latest monthly policy meeting; wherein the monetary policy was kept unchanged. BoJ governor Haruhiko Kuroda's remarks indicate Japan's central bank will largely ignore lower inflation, an effect of lower oil prices. Additionally, further monetary stimulus is unlikely unless the BoJ fails to achieve its 2% inflation target.
Kuroda said: “As I’ve said before, exchange rate changes are positive for some industries and companies and negative for others, depending on their situation. But as long as the exchange rate reflects economic fundamentals... I don’t think it is bad for the economy.”
Stocks in Focus on Exports Optimism
Weakness in yen has been a positive for many Japanese companies. A weaker yen makes exports cheaper, leading to a positive impact on trade balance. Abe himself commented: “Its (weak yen) positive for exporters and companies doing business overseas.”
The positive impact is clearly reflected in the fact that Toyota Motor Corp. (TM-Free Report) is said to be making more than four times per car than what GM earns. Also, Toyota is projected to outperform Detroit's Big Three automakers in terms of average earnings per vehicle. With forecast of 9 million vehicles to be sold, the average earnings per vehicle for the current fiscal year is at $2,726. This outpaces Ford's $994, Fiat Chrysler's $850 and GM’s $654 for 2014.
In fact, Ford has criticized the currency manipulation. Citing Morgan Stanley (MS-Free Report), they have said that weak yen adds about $2,000 per export vehicle into the accounts of Japan’s three biggest automakers. These are Toyota, Nissan Motor Co. Ltd. (NSANY) and Honda Motor Co., Ltd. (HMC-Free Report).
Meanwhile, automobile majors such as Nissan and Honda are reportedly making efforts to cash in on the increased opportunities. According to reports, while Nissan is boosting car exports, Honda targets to ship 10-20% of cars manufactured.
However, only Toyota has a favorable rank currently as it carries a Zacks Rank #2 (Buy). Nissan and Honda carry a Zacks Rank #4 (Sell).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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