Here's Why You Should Offload Toyota Stock From Your Portfolio

Core Insights - Toyota Motor Corporation is facing challenges with rising operating expenses and capital requirements, leading to a recommendation to consider offloading the stock [1] Financial Performance - Toyota's operating income for fiscal 2026 is projected at ¥3.2 trillion, a decrease of 33.2% year over year [2][8] - The pretax profit for fiscal 2026 is estimated at ¥3.87 trillion, down from ¥6.41 trillion in fiscal 2025 [2] Expenses and Investments - R&D expenses for fiscal 2026 are expected to rise to ¥1.37 trillion, up from ¥1.33 trillion in fiscal 2024, which may limit near-term margins [3] - Capital expenditure for fiscal 2026 is projected to increase from ¥2.13 trillion to ¥2.3 trillion, potentially straining near-term cash flows [4] Debt Levels - Toyota's long-term debt was ¥22.94 trillion as of June 30, 2025, an increase from ¥22.19 trillion as of June 30, 2024 [4] - The company's debt-to-capitalization ratio stands at 38%, compared to the industry average of 28% [4][8] Earnings Estimates - The Zacks Consensus Estimate for Toyota's fiscal 2026 earnings indicates a year-over-year growth of 23.9%, although EPS estimates have declined by 2 cents and 3 cents for fiscal 2026 and 2027, respectively, in the past 30 days [5]