Toyota’s Sato Beats Previous CEOs With First-Year Stock Gains

(Bloomberg) -- Toyota Motor Corp. is seeing its best performance ever in the first year under a new chief executive, since Koji Sato took the reins last April.

Shares of the world’s largest automaker have doubled in that span, exceeding the Nikkei 225 Stock Average by 60% points as of Friday close. That’s the biggest outperformance under a new executive since the merger of Toyota Motor Co. and Toyota Motor Sales Co. in 1982 created Toyota Motor Corp., according to data compiled by Bloomberg. The share price adjusts for dividends.

Gains in Toyota shares accelerated this year, in contrast to electric vehicle maker Tesla Inc., which has fallen 29%. Still, with a price-to-earnings ratio of around 11 times and a price-to-book ratio of about 1.6 times, Toyota doesn’t look overvalued among companies on the Nikkei 225 or against its global peers. 

Sato enters his second year as CEO, faced with the challenge of expanding corporate value in the rapidly changing automotive industry.

“Factors that have created a tailwind for the stock price have coincided with Sato’s first year,” including a weaker yen, inventory shortages and the market’s swing back from EVs, said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida.

Looking ahead, Toyota still has work to do in the wake of the safety scandal at some of its subsidiaries, and will likely struggle to increase output or raise prices, Yoshida said, adding that he wouldn’t be surprised if the company cuts its profit outlook at its next earnings report. “It may be difficult to expect the kind of performance we saw in Sato’s first year.”

Based on CEOs’ entire terms, Hiroshi Okuda ranks top, outperforming the Nikkei by about 106% points over his 1995 to 1999 span at the helm.

--With assistance from Eddy Duan, Gregory Turk and Ken McCallum.

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