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Toyota Motor (TSE:7203) is back in focus after reporting record 2025 sales of 10.5 million vehicles and retaining its position as the world’s top selling automaker amid ongoing concerns about the impact of tariffs on profits.
See our latest analysis for Toyota Motor.
The renewed focus on Toyota comes after a solid run in the share price, with a 90 day share price return of 11.66% and a 1 year total shareholder return of 21.81%, alongside record 2025 vehicle sales. However, the recent 7 day share price pullback of 3.31% suggests some of that momentum has cooled.
If Toyota’s latest results have you thinking more broadly about the auto sector, this could be a good moment to scan other manufacturers using our auto manufacturers for fresh ideas.
With Toyota delivering record 2025 sales, steady revenue and net income growth, and the share price already up strongly over 1 and 5 years, the key question is whether there is still an opportunity here or if the market is already fully pricing in future growth.
Against Toyota’s last close of ¥3,504, the most followed narrative sets fair value at ¥3,609.41, framing the recent share price strength in a slightly undervalued light.
Toyota’s investment in internal battery production, including various types of batteries for electric and hybrid vehicles, could bolster long term revenue and margins. By optimizing battery production and technology, Toyota positions itself competitively in the growing electrified vehicle market.
Curious what sits behind that fair value uplift, even with modest growth assumptions and a trimmed profit margin outlook? The narrative leans heavily on how future earnings, revenue mix and valuation multiples interact over the next few years, and how those moving parts could justify a higher price than today’s market is offering.
Result: Fair Value of ¥3,609.41 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this depends on key risks, including potential production halts and ongoing legal disputes that could pressure earnings and challenge those higher fair value assumptions.
Find out about the key risks to this Toyota Motor narrative.
While the fair value narrative points to a 2.9% uplift at ¥3,609.41, our DCF model takes a harsher view. On that basis, Toyota’s estimated value sits at ¥1,955.23, which is well below the current ¥3,504 price and indicates potential overvaluation. Which set of assumptions do you find more convincing?
Look into how the SWS DCF model arrives at its fair value.
7203 Discounted Cash Flow as at Jan 2026
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If you do not share these views, or you prefer to analyze the numbers yourself, you can create a custom Toyota story in just a few minutes with Do it your way.
A great starting point for your Toyota Motor research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
If you stop with just one stock, you could miss opportunities that fit your style better, so put a few minutes into scanning wider and give yourself real options.
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.
Companies discussed in this article include 7203.T.
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