Goldman: Toyota Will Recover From The Recall Disaster Just Like Ford And Honda Did

 

In a February auto industry presentation, Goldman shows how both Ford and Honda once had nasty recalls of their own in the past, yet recovered.

 

Thus Toyota, in the long run, is likely to do so as well — it just might take a few years for both market share and the stock to fully recover:
[image url="http://static.businessinsider.com/image/4b75465a0000000000fe487d/image.jpg" link="lightbox" caption="" source="" alt="Chart" align="left" size="xlarge" nocrop="true" clear="true"]

[image url="http://static.businessinsider.com/image/4b7546750000000000989dc2/image.jpg" link="lightbox" caption="" source="" alt="Chart" align="left" size="xlarge" nocrop="true" clear="true"]
At some point the stock is cheap. Toyota is trading at a low Price to Book (P/B) ratio according to Goldman, even going back as far as 1995:
[image url="http://static.businessinsider.com/image/4b7542fd00000000000d7bd9/image.jpg" link="lightbox" caption="" source="" alt="chart" align="left" size="xlarge" nocrop="true" clear="true"]
Still, we’d point out that Toyota his a much lower Price to Book during March 2009, when markets hit their recent lows. While it looks relatively small on the chart shown here, it equates to Toyota ADR shares’ 52-week low being near $57 vs. $76 now. Thus while media pessimism may seem substantial, Toyota shares aren’t exactly in crisis mode. They might be cheap, but they don’t look deeply oversold at all.

The author does not own shares in Toyota.

Add my twitter for a filter of analysis-only like this: @vincefernando

(Via Goldman Sachs, Global Auto Industry Update Presentation, February 2010)

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