Toyota MotorTM -0.75%81 WACC % is 1.93% as of Jun. 25, 2026, which is 39% below its 10-year median of 3.14. GuruFocus rates TM with a GF Score™ of 81/100 and a GF Value™ of $209.97 (Modestly Undervalued). The stock has 4 warning signs investors should review. Among 1,346 Vehicles & Parts companies, Toyota Motor ranks better than 89.52% on this metric.
As of today (2026-06-25), Toyota Motor's weighted average cost of capital is 1.93%%. Toyota Motor's ROIC % is 3.54% (calculated using TTM income statement data).
Toyota Motor generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
For a comprehensive WACC calculation, please access the WACC Calculator.
Toyota Motor (NYSE:TM) WACC % Explanation
Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Toyota Motor's weighted average cost of capital is 1.93%%. Toyota Motor's ROIC % is 3.54% (calculated using TTM income statement data).
Toyota Motor generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.
2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.
3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
Related Terms
Toyota Motor WACC % Historical Data
* Premium members only.
The historical data trend for Toyota Motor's WACC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Auto Manufacturers subindustry, Toyota Motor's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Toyota Motor WACC % vs Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Toyota Motor's WACC % distribution charts can be found below:
* The bar in red indicates where Toyota Motor's WACC % falls into.
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.
WACC
=
E
/
(E + D)
*
Cost of Equity
+
D
/
(E + D)
*
Cost of Debt
*
(1 - Tax Rate)
1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Toyota Motor's market capitalization (E) is $197154.315 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2026, Toyota Motor's latest one-year quarterly average Book Value of Debt (D) is $267681.3788 Mil.
a) weight of equity = E / (E + D) = 197154.315 / (197154.315 + 267681.3788) = 0.4241
b) weight of debt = D / (E + D) = 267681.3788 / (197154.315 + 267681.3788) = 0.5759
2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 2.65%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Toyota Motor's beta is 0.2893.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 2.65% + 0.2893 * 6% = 4.3858%
3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Mar. 2026, Toyota Motor's interest expense (positive number) was $396.709 Mil. Its total Book Value of Debt (D) is $267681.3788 Mil.
Cost of Debt = 396.709 / 267681.3788 = 0.1482%.
4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 7753.773 / 34005.744 = 22.8%.
Toyota Motor's Weighted Average Cost Of Capital (WACC) for Today is calculated as:
WACC
=
E / (E + D)
*
Cost of Equity
+
D / (E + D)
*
Cost of Debt
*
(1 - Tax Rate)
=
0.4241
*
4.3858%
+
0.5759
*
0.1482%
*
(1 - 22.8%)
=
1.93%
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Toyota Motor (TM) has a WACC % of 1.93% as of Jun. 25, 2026. The weighted average cost of capital (WACC) is the average rate a company pays to finance assets. View historical data on Toyota Motor and its competitors. This is 39% below median its historical median of 3.14. Over the past decade, Toyota Motor's WACC % has ranged from 1.93 to 4.85. According to the industry distribution chart, Toyota Motor ranks #141 out of 1346 companies in the Vehicles & Parts industry, placing it in the top 10.5%.
Is Toyota Motor's WACC % too high?
Toyota Motor's current WACC % of 1.93% is 39% below median its 10-year median of 3.14. Over the past 10 years, this metric has ranged from a low of 1.93 to a high of 4.85. The Vehicles & Parts industry median WACC % is 8.59. Toyota Motor's value of 1.93% is 77.5% below this industry median. Based on the distribution chart, Toyota Motor ranks #141 out of 1346 companies in the Vehicles & Parts industry, which is in the top quartile — a strong position relative to peers. Overall, Toyota Motor has a GF Score™ of 81/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Toyota Motor's WACC % compare to TSLA and GM?
According to the Vehicles & Parts industry distribution chart, Toyota Motor ranks #141 out of 1346 companies for WACC %. This places Toyota Motor in the top 11% of its industry — outperforming the majority of peers. The industry median WACC % is 8.59. Toyota Motor's value of 1.93% is 77.5% below this benchmark. Historically, Toyota Motor's own WACC % has ranged from 1.93 to 4.85 over the past decade. While the company's 10-year median is 3.14 vs. the industry median of 8.59, Toyota Motor has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good WACC % for a Vehicles & Parts company?
The median WACC % among Vehicles & Parts companies is 8.59, based on 1,346 companies in the industry. Companies in the top quartile (top 25%) have a WACC % significantly above this median, while those in the bottom quartile fall well below. However, WACC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Toyota Motor's current WACC % of 1.93% is 77.5% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high WACC % mean?
A high WACC % can signal that a stock is expensive relative to its fundamentals. The weighted average cost of capital (WACC) is the average rate a company pays to finance assets. View historical data on Toyota Motor and its competitors. For the Vehicles & Parts industry, the median WACC % is 8.59 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Toyota Motor's current WACC % is 1.93%, which is 39% below median its own 10-year median of 3.14. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Toyota Motor stock overvalued right now?
Based on GuruFocus' analysis, Toyota Motor (TM) is currently considered Modestly Undervalued. The stock's GF Value™ is $209.97, compared to a current price of $166.50 — trading 20.7% below its estimated fair value. The current WACC % is 1.93%, which is 39% below median its 10-year median of 3.14 and 77.5% below the Vehicles & Parts industry median of 8.59. Toyota Motor's overall GF Score™ is 81/100 with 4 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is WACC % calculated?
WACC % is calculated from a company's financial statements. For Toyota Motor (TM), the current WACC % is 1.93% as of Jun. 25, 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Toyota Motor (TM) Overvalued in 2026?
Based on GuruFocus' analysis, Toyota Motor stock appears to be undervalued.
The current stock price of $166.50 is trading 20.7% below its estimated GF Value™ of $209.97.
GuruFocus considers Toyota Motor to be Modestly Undervalued.
Key valuation signals for TM:
WACC %: 1.93% (39% below median its 10-year median of 3.14)
GF Value™: $209.97 vs. price of $166.50 (20.7% below fair value)
Industry Position: 77.5% below the Vehicles & Parts median (#141 of 1346)
No single metric tells the full story. See the TM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1937, Toyota is one of the world's largest automakers, with 11.3 million units sold at retail in fiscal 2026, including 10.5 million across the Toyota and Lexus brands. Brands include Toyota, Lexus, Daihatsu, and truck maker Hino; market share in Japan is about 50% excluding mini-vehicles, while US share is around 14%. The firm also owns stakes in Denso, a parts supplier, about 20% of Subaru, and holds investments in many other firms, including shares of Uber Technologies, Joby Aviation, Aurora Innovation, Isuzu Motors, and about 5% in each of Mazda and Suzuki. Fiscal 2026 sales excluding financial services were JPY 46.1 trillion. Toyota also has a financing arm and manufactures homes and boats.
81GF Score
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