Auto Stocks: Some Speeding Ahead, Some Stalling

 |  Includes: DDAIF, F, GM, HMC, TM, TTM
by: Stockerblog

You may have just read in the news about how Toyota's (NYSE:TM) revenues were up, but General Motors' (NYSE:GM) and Ford's (NYSE:F) were down. After all, isn't Toyota the fastest growing American car company?

In addition, Toyota is the largest car company in the world by market cap, almost twice the size of Honda (NYSE:HMC), the second largest. So is Toyota a buy? It has a P/E of 15 which is lower than the industry average of 19, the price sales ratio is a reasonable 1.15, and the PEG is a strong 1.7. Year over year quarterly revenue growth is 15.2%, not bad for a company that makes cars. Just in March alone, its auto sales were up over 11%, with sales of its hybrid cars continuing to be strong.

Jumping to the next largest car maker, Honda Motor Co. Ltd. has a significantly higher P/E than Toyota at 24.5. P/S is higher at 1.4, and the PEG is 1.8. Quarterly revenue growth is 12%, over 3% lower than Toyota. One thing the Honda stock does have going for it is the fact that it pays a dividend, albeit a small one at .7%.

Next we have Daimlerchrysler AG (DCX), the German based company which manufactures Mercedes-Benz cars, Chryslers, Jeeps, and Dodges. P/E is 18, and the P/S is an excellent .43. It pays a nice yield of 2.9%. Unfortunately, its quarterly revenue growth is negative; and its quarterly earnings dropped by over 45%.

Finally, we get to an American car company that has its headquarters in the U.S., General Motors Corporation. During the last year, the stock has traded between 19 and 38, and has been bouncing all over the place during the last six months. It appears to be propped up by its 3.3% yield. However, its earnings are negative and the P/S is a bizarre .08 [generally, when a price sales ratio is below 1, it is a good sign. However, when it is extremely low, it generally means something strange is going on]. Quarterly revenues are negative and return on equity is a negative 43%. Fortunately, GM has some convertible bonds available, which would be a safer way to invest in the company.

Trivia: The market cap of Toyota stock is about equal to Honda, Daimlerchrysler, and GM combined.
Ford Motor Co. comes right after GM in terms of market cap. Negative earnings, P/S of .1 and a yield of 2.3%. Return on equity is an unbelievably negative 252%. Ford also has convertibles available for investing in, as alternatives to the common stock.

Last but not least on the list is Tata Motors Ltd. (NYSE:TTM) which is an India based company which manufactures cars, trucks, buses, and other vehicles. Its P/E is a reasonably low 14, the P/S is .86, and the PEG is a fantastic .62. Quarterly revenue growth is over 60% and quarterly earnings growth is over 30%. It even pays a small dividend of 1.7%. Is this a hidden gem? If you are willing to invest in a non-U.S., non-German, non-Japanese company, Tata may be worth further investigation.

Disclosure: Author owns DCX and F.