The surge in hybrid electric vehicle (EV) sales amid concerns over EV prices and charging infrastructure underscores the growing consumer preference for hybrids. As the Biden administration emphasizes emissions standards, automakers producing plug-in and regular gas-electric hybrids stand to gain. Amidst this backdrop, evaluating the investment prospects of Ford Motor Company (NYSE:F) and Toyota Motor Corporation (NYSE:TM) becomes crucial, as both vie for a larger share of the expanding hybrid EV market.
Ford Motor: A Deep Dive
Ford Motor Company, headquartered in Michigan, boasts a diverse portfolio of vehicles and has a market capitalization of $51.89 billion. Despite a modest 14.5% increase in its stock over the past year, Ford’s long-term performance has been lackluster, with a decline of nearly 15% over the past decade.
Following the reinstatement of its dividend payments, Ford’s annual dividend of $0.60 per share yields 4.6%, backed by a robust payout ratio of 61.4%. Trading at a discount to its peers and historical averages, Ford’s valuation appears attractive, with forward adjusted earnings at 6.85x and sales at 0.29x.
While Ford faced challenges in its EV segment, particularly with Model E, its hybrid sales surged, reporting a record increase in Q4. Despite challenges such as higher labor costs, Ford’s adjusted Q4 earnings exceeded expectations, reflecting positive momentum in its hybrid offerings.
Analysts’ sentiment towards Ford stock has shifted to a “Hold” rating, with a consensus price target of $13.70, suggesting a potential upside of 3.2% over the next year.
Toyota’s Strong Position in the Market
Toyota Motor Corporation, valued at $341.6 billion, stands out as a leader in the hybrid segment, commanding a 40% market share in the U.S. With significant stock returns over the past year and decade, Toyota has a consistent dividend track record, offering shareholders an annualized dividend of $4.00 per share.
Trading at a premium to its peers, Toyota’s forward adjusted earnings and sales indicate confidence in its growth trajectory. The company reported robust fiscal Q3 sales and an increase in net income, driven by a significant surge in hybrid car sales.
Toyota’s leadership in hybrid technology is underscored by its optimistic projections for hybrid car sales and its recognition as a solution for achieving carbon neutrality. Analysts maintain a “Moderate Buy” rating for Toyota stock, with a consensus price target of $260.50, implying a potential upside of 3.5%.
Conclusion
While both Ford and Toyota are positioned to capitalize on the hybrid EV market, Toyota’s established dominance, innovation, and reliable dividend payments make it a more compelling investment choice. With its strong financial position and optimistic growth outlook, Toyota emerges as the preferred option for investors seeking exposure to the burgeoning hybrid EV market.
Featured Image: Megapixl
Author Faith Yakubu 
