Assessing Toyota After a 27.6% Surge and Solid State Battery Push in 2025

• Wondering if Toyota Motor is still good value after its huge run, or if you are late to the party? This breakdown is designed to give you a clear, no nonsense view of where the stock stands today.
• The share price has climbed to around ¥3,363, with gains of 8.1% over the last week, 11.0% over the past month, 11.7% year to date, and 27.6% over the last year. The 3 year and 5 year returns sit near 99.8% and 150.5% respectively.
• Recently, markets have been reacting to Toyota's push into next generation technologies like solid state batteries and software defined vehicles, plus ongoing investments in hybrids and EVs as governments tighten emissions rules. At the same time, investors have been digesting headlines about supply chain normalization, currency moves, and how Toyota is positioning itself against pure play EV rivals.
• On our framework, Toyota scores a 3/6 valuation score, meaning it looks undervalued on half of the key checks we run. In the next sections we will unpack what different valuation methods say about that score, and then finish with a more powerful way to think about Toyota's value beyond the usual numbers.

Toyota Motor delivered 27.6% returns over the last year. See how this stacks up to the rest of the Auto industry.

Approach 1: Toyota Motor Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today. For Toyota, this uses a 2 stage Free Cash Flow to Equity approach built on cash flow projections.

Toyota's latest twelve month free cash flow is negative at roughly ¥467.3 Billion, reflecting heavy investment and some cyclicality. Analysts and model estimates then project a recovery, with free cash flow rising to around ¥3.2 Trillion in 2035. These projections combine analyst forecasts for the next few years and Simply Wall St extrapolations further out.

When all those future ¥ cash flows are discounted back, the model produces an estimated intrinsic value of about ¥1,966 per share. Compared with the current share price of roughly ¥3,363, this implies the shares are about 71.1% above the DCF estimate, so on this model Toyota appears overvalued.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Toyota Motor may be overvalued by 71.1%. Discover 916 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Toyota Motor.

Approach 2: Toyota Motor Price vs Earnings

For a profitable, mature business like Toyota, the price to earnings (PE) ratio is a useful way to judge value because it directly links what investors pay today to the profits the company is generating right now. In general, faster growth and lower perceived risk justify a higher PE, while slower growth or higher risk typically demand a lower, more conservative multiple.

Toyota currently trades on about 9.46x earnings, which is below the Auto industry average of roughly 18.67x and also under the peer group average of about 10.46x. Simply Wall St also calculates a Fair Ratio of 16.74x for Toyota, a proprietary estimate of what PE the stock should trade on given its earnings growth outlook, profitability, industry positioning, market cap and risk profile.

This Fair Ratio is more informative than a plain industry or peer comparison because it is tailored to Toyota's specific fundamentals rather than assuming all automakers deserve the same multiple. With Toyota's actual PE of 9.46x sitting well below the 16.74x Fair Ratio, the shares appear attractively priced on this earnings based lens.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Toyota Motor Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a simple tool on Simply Wall St's Community page. It lets you capture your view of Toyota's story as a set of assumptions for future revenue, earnings and margins, link that story to a dynamic financial forecast and fair value, and then compare that fair value to the current share price to help inform whether you might buy, hold or sell. The whole picture automatically updates as new news or earnings arrive. For example, one investor might build a bullish Toyota Narrative around strong battery plant execution and steady margins that supports a fair value near ¥3,400, while another, more cautious investor might emphasize litigation, production risks and weaker profitability to arrive at a fair value closer to ¥2,400.

Do you think there's more to the story for Toyota Motor? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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