TOYOTA MOTOR CORP/

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 5▾

  TM overvalued: all 5 models price fair value below $212.43 (median $30.83)

  Graham fair value$31.54

  ✗Graham-573.5% margin vs $212.43

  Greenblatt fair value$17.73

  ✗Greenblatt-1098.1% margin vs $212.43

  Dreman fair value$30.83

  ✗Dreman-589.0% margin vs $212.43

  Pabrai fair value$26.92

  ✗Pabrai-689.1% margin vs $212.43

  Akre fair value$37.99

  ✗Akre-459.2% margin vs $212.43
• Valuation8% pass✓ 3✗ 25▾

  12 of 13 flag TM's valuation — Graham, Lynch, Greenblatt +9 more

  Price / 3-yr avg EPS103.3x

  ✗Graham<= 15x

  Price-to-Book Ratio11.5x

  ✗Graham<= 1.5x

  P/E x P/B1,193.0

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value8.1%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=8.1%, ROC=21.7%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS88.4x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)112.2x

  ✗Dreman< 8x

  Price / Book Value per Share11.5x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessP/E=88.4x, OE Yield=1.7%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=88.4x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=88.4x, P/B=11.5x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-588.9% (IV=$30.83 vs Price=$212.43)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low126% of trailing low ($168.42)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+12.77%; #454/6340 (top 7.2%)

  ✓AsnessTop 30% of eligible cross-section✓OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.9631; #1556/6449 (top 24.1%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS88.4x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share11.54x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+1.2878; #1509/5247 (top 28.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+11.83%; #1756/6202 (top 28.3%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag TM's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 1.1% vs Rev: 7.8%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency16/17 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth7.8%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 7.3% -> 10.0%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR3.0%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency13% pass✓ 2✗ 9▾

  7 of 8 flag TM's efficiency — Graham, Buffett, Greenblatt +4 more

  Current Ratio1.26

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)5.9%

  ✗Buffett> 10%

  ROIC - WACC-4.1%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)21.7%

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.19 -> 1.26

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.50x -> 0.51x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities1.26

  ✗Dreman> 1.5

  Return on Invested Capital5.9%

  ✗Munger> 15%

  ROIC (high and growing)FY2022: ROIC=4.3%; FY2023: ROIC=6.9%; FY2024: ROIC=5.9%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC4.3% (RR=74% x ROIC=5.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 5.9%)

  ✗SleepROIC > 12% in a majority of years
• Debt & Leverage17% pass✓ 4✗ 11▾

  10 of 12 flag TM's debt & leverage — Graham, Buffett, Lynch +7 more

  LT Debt vs Net Current AssetsLT Debt $153.5B vs NCA $51.1B

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.79, IC: 2.9x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity0.79

  ✗Lynch< 0.33

  Cash - Long-term Debt$-111.1B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change23.48% -> 24.53%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.26

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity0.79

  ✓Dreman< 0.8✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Debt Levels0.79

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=2.9x, D/EBITDA=4.0x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity0.79

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.7913; #2988/4210 (top 71.0%)

  ✗AsnessTop 30% of eligible cross-section
• Profitability25% pass✓ 13✗ 22▾

  12 of 16 flag TM's profitability — Graham, Buffett, Lynch +9 more

  Positive EPS (10 years)16/17 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)16/17 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)11.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)10.0% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$21.0B

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE13.3%

  ✗Lynch> 15%

  EBIT / Enterprise Value8.1%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=8.1%, ROC=21.7%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets5.09%

  ✓PiotroskiROA > 0

  ROA Change YoY5.49% -> 5.09% (delta: -0.40%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=3.95%, ROA=5.09%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue13.4%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity13.3%

  ✓Dreman> 12%

  Margin of SafetyP/E=88.4x, P/B=11.5x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity12.1% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-588.9% (IV=$30.83 vs Price=$212.43)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency16/17 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue10.0%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity13.3%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend7.3% (2022) -> 10.0% (2024)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 7.3% -> 10.0%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+12.77%; #454/6340 (top 7.2%)

  ✓AsnessTop 30% of eligible cross-section✓OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+13.26%; #1343/5226 (top 25.7%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0084; #726/5884 (top 12.3%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years10/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts27% pass✓ 4✗ 11▾

  Split decision: 10 FAIL · 4 PASS · 2 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (2/9)✗LynchFAIL (1/7)✗GreenblattRank #741✓PiotroskiPASS (F-Score 5)✗DremanFAIL (4/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (0/6)✗MarksFAIL (2/5)✓AckmanPASS (4/9)✓TempletonPASS (4/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow30% pass✓ 4✗ 8▾

  7 of 10 flag TM's cash flow — Lynch, Piotroski, Dreman +4 more

  Free Cash Flow Proxy$21.0B

  ✓BuffettPositive and growing

  FCF Positive and Growing$20.2B

  ✗LynchPositive and growing

  Operating Cash Flow$24.7B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=3.95%, ROA=5.09%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)112.2x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=88.4x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive12/12 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency17/17 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section