Published: 24 May 2022 by Tela Equity Research analyst - telaadvisor

Toyota Motor is a Japanese multinational automotive manufacturer that was founded in 1937. TOYOTA INDUSTRIES CORPORATION is primarily engaged in the, manufacture and sale of automobiles, industrial vehicles and textile machinery. The Company operates in three business segments.

The Automobile segment manufactures and sells automobiles,

• engines,
• compressors for automotive air-conditioners, and
• electronic equipment, among others.

The Industrial Vehicle segment provides

• forklift trucks,
• warehouse equipment,
• automatic warehouse,
• vehicles for high-place work,
• logistics solution and sales finance business.

​The Textile Machinery segment offers

• weaving machines and
• spinning machines, as well as yarn quality measurement equipment and cotton grading equipment.

Sales per business

Profit margin:                 9.08 %
Operating margin:          9.55 %
ROA:                                 2.88 %
ROE:                                 11.18 %
​PE vs Market: Toyota is good value based on its PE Ratio (9.9x) compared to the JP market (12.2x).

TOYOTA MAJOR STRENGTH
Toyota’s strengths are internal factors that help Toyota maintain its success in the auto industry. These are the reasons why Toyota is so successful today:

1. The Toyota Way: Toyota’s operations follow the principles of continuous improvement and respect for people. These principles boost productivity and foster innovation. They also inspired the concept of lean management. For many decades, these principles have formed the core strength of Toyota.
2. Fuel Cell Patents: Automobile companies are pursuing the vision of zero-emission vehicles through two main technologies – hydrogen fuel cells and electric vehicles. Toyota owns around 5,680 global patents related to hydrogen fuel cells. These patents put Toyota in a strong position in the zero-emission vehicles market
3. Solid-state battery park
4. Hybrids: Toyota develops competencies in clean energy vehicles, it’s consolidating its position in hybrid vehicles. Toyota makes some of the most reliable green cars in the market.

As a tool, SWOT analysis looks at weaknesses as internal factors that prevent or slow down growth. Here are some of Toyota’s weaknesses:
1.      Recalls: Although Toyota sets the standards for quality control, its design and production aren’t flawless. For instance, early this year, Toyota recalled 700,000 vehicles because of a faulty fuel pump. Such situations devalue the people’s trust in the brand and can undo decades of goodwill.
2.      Rigid hierarchy
3.      Partial global presence
​

​Ford, Volkswagen, Hyundai, General Motors, and Nissan. Together these companies employ 1 million people worldwide, with Toyota employing only 359 thousand people and ranked 1st among Toyota’s Top 5 competitors. The global automotive industry is worth as much as US$4 trillion. With as much as an estimated 1.4 billion cars in use on the road around the world.

​Akio Toyoda(65Y)
12.9 years tenure
$3 449 943 salary
Mr. Akio Toyoda has been a Director of DENSO Corporation since June 2019. Mr. Toyoda has been the Chief Executive Officer of Toyota Motor Corporation (TMC) since June 23, 2009 and its President since 2009 and serves as its Chief Branding Officer. Mr. Toyoda had served as Chairman and Chief Executive Officer of Toyota Motor North America, Inc. He served as Chief Officer of the Electric Vehicle (EV) Business Planning Department at Toyota Motor Corporation since December 1, 2016 until July 28, 2017.
He serves as a Senior Adviser of Toyota Media Service Corporation. He has been the President of Hitachi Ltd and Honda Motor Co. since March 2009. He serves as an Auditor of Toyota Boshoku Corporation. He served as the Chief Executive Officer and President of Toyota South Africa Motors (Pty) Ltd until April 1, 2016.
He served as an Executive Vice President at Toyota Motor Corporation from January 21, 2005 to June 2009, Senior Managing Director from 2003 to 2005 and Chief of Asia & China Operations Officer since 2003 and also served as its Division General Manager of Taiwan & China Offices. He joined TMC in 1984 and was its Managing Director from 2002 to 2003. He served as Vice President of New United Motor Manufacturing Inc. He served as an Auditor of Shiroki Corporation. He served as a Corporate Auditor at JTEKT Corporation.

Published: 03 April 2022 by Tela equity research analyst - telaadvisor

​1.  BUSINESS

• Adyen N.V. operates a payments platform in Europe, the Middle East, Africa, North America, the Asia Pacific, Latin America. The company's platform integrates payments stack that include gateway,
• Risk management, processing,
• Issuing, acquiring, and
• Settlement services.

It offers a back-end infrastructure for authorizing payments across merchants' sales channels, as well as online, mobile, in-store, and APIs; and data insights. The company's platform services a range of merchants across various verticals, connecting them directly to Visa, Mastercard, and other payment methods. Adyen N.V. was incorporated in 2006 and is headquartered in Amsterdam, the Netherlands.

​

Profit margin: 7.84 %
Operating margin: 10.14 %
ROA: 7.65 %
​ROE:31 %

Strengths
- Diversity in customer portfolio lending it a financial cushion.
- Integration with multiple international and local payment methods.

Weaknesses
- High dependence on European market 
- Low presence in emerging markets
Opportunities
- Growth of e-commerce boosting growth of payment gateways

​The global market for payment processing is massive, with US$1.6 trillion in total addressable market revenues. Payment revenue is expected to grow at a CAGR of 7% through to 2021. Adyen has plenty of room to grow, as growth of 1% in Adyen’s market share will lead to an additional US$1.6 billion dollars of revenue. These massive payments industry has traditionally supported many intermediaries, which Adyen has disrupted.

Adyen’s primary competitors include the likes of PayPal, Worldpay, and Stripe. Adyen caters to big, international operations while Stripe targets the startup app developer community, making up for lower volume by charging a slightly higher margin. Adyen’s transaction volume last year in 2021 was $516 billion, while net revenue grew to $469 million. The company grosses less than 1% of every dollar processed, far below the 2% to 3% that Worldpay, PayPal and Stripe make.

Adyen is a multi-sided platform that exclusively charges merchants. The value to merchants is derived from the partnerships they have formed with card schemes, as well as the technology platforms. Adyen has partnered with popular Ecommerce, Billing, and POS platforms to ensure their ‘plug-and-play’ solution will integrate seamlessly into the technology stack of their merchant customers.

​Adyen is focused on providing their merchants with the best payment experience by constantly innovating. Adyen continuously improves its products with regular software updates every four weeks to ensure that they stay competitive with the competition and extend their product offering. With their existing scalable business model, Adyen should focus on developing partnerships with merchants in countries like China and India where the growth of E-commerce is highest. While the outlook within the B2C payments space is positive, Adyen should consider adjacent industries moving forward. A key differentiator in the market is their relationships with card schemes around the world.

​Pieter van der Does (52 yo)
16.17yrs
€628,685: Compensation
Mr. Pieter Willem van der Does is a Co-founder, Chief Executive Officer of Adyen B.V. and has been its Member of Management Board since July 6, 2007. He served as President at Adyen N.V. until January 2020. Prior to co-founded Adyen in 2006, Mr. van der Does was a board member of the International Merchant Services division of the Royal Bank of Scotland (RBS).
The companies managed under this division were WorldPay, Bibit, the International acquiring business of Streamline and Trustmarque. He has been active in the PSP world since 1999 when he joined Bibit board. In this position, he was responsible for Sales and Marketing, Legal and the international expansion of the business.

BUSINESS OVERVIWS
The World's Largest Nonalcoholic Beverage Company.

The Coca-Cola Company (NYSE: KO) is a total beverage company with products sold in more than 200 countries and territories. Coca-Cola company’s purpose is to refresh the world and make a difference. Their portfolio of brands includes Coca-Cola, Sprite, Fanta and other sparkling soft drinks. Their hydration, sports, coffee and tea brands include Dasani, smartwater, vitaminwater, Topo Chico, Powerade, Costa, Georgia, Gold Peak, Honest and Ayataka. Together with their bottling partners, they employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.

AT A GLANCE

Calculating the true value of any business is not as easy as it may seem. While the market cap of a public entity, such as Coca Cola, is its stock price multiplied by the total number of shares outstanding, calculating Coca Cola's enterprise value requires a different approach.
It uses Coca Cola's balance sheet items such as

• long-term debt,
• the book value of the preferred stock,
• minority interest, and
• other important financials.

Although the value of free cash flow will most likely stabilize to about 11 B.
Coca-cola shows a prevailing Real Value of $66.19 per share. The current price of the firm is $61.39. At this time, the firm appears to be slightly undervalued. Our model approximates the value of Coca-cola from analyzing the firm fundaments such as:

• ROE of 39.72 % and
• Profit margin of 23%.

COCA COLA 
DIVIDENDS ANALYSIS
Coca Cola has scaled down on payment of dividends at this time. PE Ratio is expected to rise to 30 this year, although the value of accumulated retained earnings deficitwill most likely fall to about 76.4 B.
There are various types of dividends Coca Cola can pay to its shareholders, and the actual value of the dividend is determined on a per-share basis. It is to be paid equally to all of Coca Cola shareholders on a specific date, known as the payable date. The cash dividend is the most common type of dividend payment - it is the payment of actual cash from Coca-Cola directly to its shareholders. There are other types of dividends that companies can issue, such as stockdividends or asset dividends. When Coca Cola pays a dividend, it has no impact on its emterprise value. It does, however, lowers the Equity Value of Coca Cola by the value of the dividends paid out.

RISK FACTORS
Coca-Cola secures Sharpe ratio of 0.2, which signifies that the company had 0.2% of return per unit of standard deviation over the last six months. Our philosophy in foreseeing the volatility of a stock is to use all available market data together with stock-specific technical analysis that cannot be diversified away. Downward market volatility can be a perfect environment for investors who play the long game. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Coca Cola's beta of 0.71 provides an investor with an approximation of how much risk Coca Cola stock can potentially add to one of your existing portfolios, a beta of 0.71 indicates less volatility.

CONCLUSION
Coca-Cola remains the undisputed leader in the beverage industry, and numerous players such as PepsiCo and Red Bull have been unable to displace it from this position. Coca-Cola’s position is attributable to its unique branding strategy that caters to customer preferences. Competitors like Red Bull and Starbucks pose a threat to its dominance in specific markets.
However, Coca-Cola’s continued investments in developing markets and its focus on product quality will ensure that it remains the number one player in this highly competitive industry, at least in the foreseeable future.

I want to give you more insight into why some companies are a wonderful opportunity to hedge against inflation and provides you an opportunity to build a solid portfolio. In my search for truly wonderful businesses, I look for specific qualitative and quantitative factors. What define a great business to me is:

• One with MAOT
• With high returns on capital relative to its peers,
• Growth opportunities, and durable competitive advantage.

​What is more as Warren Buffet refers is management’s decisions must be intelligent, and their interests must be business oriented, because management, ultimately, is the link between business value and shareholder value. Tela advisor strive to buy shares only in high quality companies which I believe can compound in value for many years to come.
We  believe  that  Tractor  Supply  is  an  excellent  business,  with  high  returns  on  invested  capital,  intelligent management, and  strong  growth  potential.  Tractor  Supply  has consistently  grown  store  count,  and  revenues  for  over  20  years grown from $2.068B in 2005 to $12,29B in 2021.  

Tractor  Supply  Company  is  an  excellent business  operating  in  a  dominant  position  within  the  niche marketplace. Tractor  Supply’s  product selection  is precisely  targeted to  its core-customer base, and  the company  knows its customers well.  
Sales per Business
Growing  sales  by  opening  new  stores  is  good  but  generating  higher  sales  from  existing  stores  is  even more important  for  a  retailer  as  it  is  an  indication  of  the  company’s  ongoing  relevance  to  consumers  and competitive  position.

​We  believe  that  Tractor  Supply  Company  has  excellent  growth  opportunities  ahead.  The  company  plans  to open  over  600  new  Tractor  Supply  stores,  as  well  as  800  new  subsidiary  pet  supplies  stores  in  the  coming years.  Finally,  the  company  stands  to  continuously  expand  its  customer  base  as  more  families  migrate  to the suburban  markets  which  contain  most  of  Tractor  Supply’s  nearly  two  thousand  stores.  

Company Overview
Tractor  Supply  Company  (TSCO:  NASDAQ)  has  a  well-established  dominance  as  a  specialty  store covering  the  broad  needs  of  its  mostly  suburban  and  rural  clientele.  Products  include  farm,  ranch,  home, garden,  pet,  clothing,  livestock,  and  equine  needs  along  with,  as  the  name  suggests,  tractor  parts, accessories,  and  maintenance  needs.  “Everything  but  the  tractor”  as  one  analyst  put  it.  TSCO  thrives  in  a niche  market  of  suburban,  and  rural  areas  where  a  competitor  with  a  similar  range  of  products,  and  who  can compete on  price is nowhere to  be found. Tractor  Supply  benefits  from  repeat  business  from  its  most  loyal  customers  as  many  of  the  items  the company  sells  are  consumables. Part  of  TSCO’s  strategy  for  repeat  business  comes  from  its  loyalty  rewards  program  called  “Neighbor's Club”.  Neighbor's  Club  members  account  for  65%  of  TSCO’s  total  sales,  and  membership  continues  to grow.  Retention  rates  are  higher  than  95%  for  club .

​members,   and  new  millennial  customers  purchasing items  such  as  pet  food,  chicken  feed,  and  other  products  are  joining  the  Neighbor's  Club  at  a  rate  of  1  in  3 customers.
As  a  national  brand,  Tractor  Supply  benefits  from  scale-based  cost  advantages  in  advertising  and  has developed  a  successful  customer  loyalty  program,  which  helps  drive  repeat  business.  Repeat  customers  are extremely  valuable  to  any  business  because  they  cost  far  less  to  acquire.  Maintaining  these  customer relationships  is  an  important  task  necessary  to  protect  the  company’s  revenues.  Tractor  Supply’s  Neighbor's Club  helps  maintain  these  important  relationships  by  way  of  reward  programs,  and  additional  perks  such as  free  utility  trailer  rentals  for  qualified  customers.   In  order  to  maintain  this  competitive  advantage, Tractor Supply  is  currently  expanding  product selection, and  continuously  adding  perks  via  the  Neighbor's Club.  The  Neighbor’s  Club  now  has  over  20  million  members.

Performance  measures  such  as  sales  per  store,  EBITDA  per  store,  net  income  per  store,  and  sales  per  square foot  show  a  positive  trend,  with  2020  showing the  strongest  year  yet. Sales  per store  have  increased 38.8% from  $3.6  million  in  2010,  to  $5m  in  2020.  Similarly,  sales  per  square  foot  have  increased  46.2%  from $225.89  in  2010  to  $330.45  in  2020.  EBITDA  per  store  has  nearly  doubled  from  $336k  in  2010  to  $666k in  2020 ​and  finally,  net  income  per  store  has  grown  from  $168k  in  2010,  to  $356k  in  2020,  representing  a 112% increase.

Capital Allocation
Over  the  past  10  years  Tractor  Supply  Company  generated  $6.2  billion  in  cash  from  operations.  $2.3  billion was  spent  on  capital  expenditures  and  acquisitions  over  that  same  period. 

• Net  income  grew  by  $581  million over  the  10  years. 
• In  addition,  the  company  spent  $3.2  billion  on  stock  buybacks, 
• Reducing  shares outstanding  by  22%  of  its  shares. 
• Finally,  the  company  paid  $1.1  billion  in  dividends,  and  currently  yields about  1%.  

Cash dividends  paid  by Tractor Supply Company  have increased  by  more than 8-fold  from $20  million  in 2010, to $175  million  in  2020. This equates to  $1.05 per share in 2010, and $1.5 per share in 2020.

Hal  Lawton  (CEO)  has  focused  on  better  monetizing  TSCO’s  omnichannel  presence,  which  now  accounts for  10%  total  sales  in  Q2  2021,  as  opposed  to  2%  at  year-end  2019.  Lawton  has  successfully  allocated resources  to  help  TSCO’s  ecommerce  sales  grow  by  5-fold.  We expect online and  in-app  sales  to  continue to  grow  as  a  %  of  total  sales  as  the  younger,  tech-savvy  generations  choose  to  shop  at  Tractor  Supply  more over the coming  years.

Conclusion
We  believe  that  Tractor  Supply  Company  is  a  high-quality  company.  It  earns  outstanding  returns  on  capital underpinned  by  economies  of  scale,  has  ample  room  for  growth  and  its  management  has  done  an  admirable job  of  capital  allocation. Tractor  Supply  recently  raised  company  guidance  during  the  Q2  2021 earnings  call.  Current  guidance  from  management  states  a  range  of  $12.1  billion  to  $12.3  billion  in revenues,  with  comparable  store  sales  growth  in  the  range  of  11%  to  13%  for  2021.  The  company  also expects  share  repurchases  to  range from $700  million  to  $800  million.   The company  is currently  acquiring  Orscheln  Farm &  Home,  a  retailer of farm and  ranch  supplies, which of  course,  is  in  line  with  Tractor  Supply’s  core  business.  The  acquisition  will  lead  to  an  addition of  167 Orscheln  Farm & Home  stores across 11  states, for  a price of  $297  million. Orscheln  Farm  &  Home’s potential  addition  to  TSCO’s  income  is  not  included  in  current  guidance.   

​FISRTS STEP
Install and load those packages and pull data from Yahoo Finance. Identify the class you are working with, what type of data are we pulling? The class will tell us quickly that it is

XTS ~zoo.

​When we have XTS data set that we are working with XTS object, that means we have the data column and index filed which contain dates in it. It is a little bit different than data frame data set. For this analysis purpose I am going only to analyze adjusted prices. You are free to work with (OHLC), open, high, low, and close or even only with volume. 

​class(PYPL_adjsusted)
## [1] "xts" "zoo"

NEXT STEP
Next step is to look at ACF an PACF.
ACF is an (complete) auto-correlation function which gives us values of auto-correlation of any series with its lagged values. We plot these values along with the confidence band and tada! We have an ACF plot. In simple terms, it describes how well the present value of the series is related with its past values. A time series can have components like trend, seasonality, cyclic and residual. ACF considers all these components while finding correlations hence it’s a ‘complete auto-correlation plot’.

​
PACF is a partial auto-correlation function. Basically, instead of finding correlations of present with lags like ACF, it finds correlation of the residuals (which remains after removing the effects which are already explained by the earlier lag(s)) with the next lag value hence ‘partial’ and not ‘complete’ as we remove already found variations before we find the next correlation. So, if there is any hidden information in the residual which can be modeled by the next lag, we might get a good correlation and we will keep that next lag as a feature while modeling. Remember while modeling we do not want to keep too many features which are correlated as that can create multicollinearity issues. Hence we need to retain only the relevant features. 

References​
Hlavac, Marek. 2018. stargazer: Well-Formatted Regression and Summary Statistics Tables (version 5.2.2). https://CRAN.R-project.org/package=stargazer.
Hyndman, Rob, George Athanasopoulos, Christoph Bergmeir, Gabriel Caceres, Leanne Chhay, Mitchell O’Hara-Wild, Fotios Petropoulos, Slava Razbash, Earo Wang, and Farah Yasmeen. 2020. forecast: Forecasting Functions for Time Series and Linear Models (version 8.12). https://CRAN.R-project.org/package=forecast.
Kleiber, Christian, and Achim Zeileis. 2020. AER: Applied Econometrics with R (version 1.2-9). https://CRAN.R-project.org/package=AER.
Pfaff, Bernhard. 2016. urca: Unit Root and Cointegration Tests for Time Series Data (version 1.3-0). https://CRAN.R-project.org/package=urca.
Ryan, Jeffrey A., and Joshua M. Ulrich. 2020. quantmod: Quantitative Financial Modelling Framework (version 0.4.17). https://CRAN.R-project.org/package=quantmod.
Wickham, Hadley, and Jennifer Bryan. 2019. readxl: Read Excel Files (version 1.3.1). https://CRAN.R-project.org/package=readxl.
Wickham, Hadley, and Dana Seidel. 2020. scales: Scale Functions for Visualization (version 1.1.1). https://CRAN.R-project.org/package=scales.
Zeileis, Achim. 2019. dynlm: Dynamic Linear Regression (version 0.3-6). https://CRAN.R-project.org/package=dynlm.

18 MONTHS  SNAPSHOT PERFORMANCE

Mastercard Incorporated is a technology company that connects consumers, financial institutions, merchants, governments and businesses across the world, enabling them to use electronic forms of payment. The Company allows user to make payments by creating a range of payment solutions and services using its brands, which include MasterCard, Maestro and Cirrus.

The Company provides a range of products and solutions that support payment products, which customers can offer to their cardholders. The Company's services facilitate transactions on its core network among account holders, merchants, financial institutions, businesses, governments and other organizations in markets globally. The Company's products include consumer credit, consumer debit, prepaid and commercial.

​It also provides integrated offerings such as cyber and intelligence products, information and analytics services, consulting, loyalty and reward programs and processing solutions.

Stock analysis expert use words often such as the "DOW" was up 500 basis point, or the "NASDAQ" is down 70 basis point in a similar connatation failing to understand that both are different. Dow Jones Industriel average (DJIA) refers to stock market index that measures the stock performance of 30 large companies listed on stockexchanges in the united states. It is one of the most commonly followed equity indices.

 whereas NASDAQ is an electronic exchange system that stands for the National Association of Securities Dealers Automated Quotients Exchange. NASDAQ also refers to an index(NASDAQ100, 102 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. It is a modified capitalization-weighted index.

The stocks weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components. It is based on exchange, and it does not have any financial companies. The financial companies were put in a separate index, the NASDAQ Financial-100.). Hence it is used in two different ways, i.e. an exchange and also an index that presents a certain portion of the market. Here we discuss the NASDAQ vs Dow Jones in R.

LOAD PACKAGES
library(quantmod)
library(magrittr)
library(ggplot2)
​
Now that our libraries are uploaded, let’s start to pull the stock quote data for NASDAQ and DJI. Since we will be manually pulling in the data from a financial source (YAHOO! FINANCE), there will be no need to load a dataset.

Further reading
Refrences

• https://www.instagram.com/tela_advisor/
  
• https://www.amazon.com/Dow-Theory-Robert-Rhea/dp/160796628X/ref=sr_1_1?dchild=1&keywords=the+dow+theory&qid=1609926038&s=books&sr=1-1
• https://en.wikipedia.org/wiki/NASDAQ-100