The recalls gave rise to unexpected legal expenses occasioned by the company's involvement in litigation filed by auto accident lawyers.

Since then, the Japanese automaker has managed to surprise many people. Toyota reported strong quarterly numbers that exceeded analysts' expectations. The company also projected positive numbers for the rest of the year. 

Toyota posted net income of $3.2 billion for the quarter ended Sept. 30. Compared to the same period a year ago, when net income was $1 billion, this is a significant jump. Analysts had predicted net income to be $2.83 billion. 

The company reported earnings per share of $81.44, which walloped analysts' estimates of $72.97 by $8.47. In the same quarter in 2011, the company posted earnings per share of $23.64. In a year-to-year comparison, revenue was up from the prior year by 18.2%, hitting $67.6 billion.

Toyota's numbers are even more impressive when considering the latest tensions between Japan and China. China had boycotted goods manufactured in Japan because of the ongoing territorial dispute involving a group of tiny islands. But because Toyota's exposure in China is not as vast as its competitors -- Nissan (NSANY) and Honda (HMC) -- the subsequent decline of sales in China did not affect Toyota's bottom line as much as it did the other Japanese automakers. As a result, Toyota projected its full-year earnings outlook would continue to improve, whereas Honda, due to weak Chinese sales, reduced its profitability outlook for the year. Toyota indicated that a stringent cost-cutting program would take up the slack for its Chinese sales drop. 

Last year's March earthquake and the devastating tsunami that struck Japan, along with unprecedented flooding in Thailand, greatly hindered Toyota's production. Toyota said that it had made repairs and adjusted to the conditions, resulting in the company's production being back on track. 

In the U.S., where Toyota's brand had become tarnished because of frequent product recalls, the company appears to have resurrected its reputation as one of the world's leading auto manufacturers. Autodata reported that sales of Toyota light vehicles in the U.S. rose by 15.8% in October. 

The unexpected uptick in earnings triggered a rally in Toyota's stock price last week. Shares rose by 4.56%, hitting $81.35. The price-to-earnings ratio of Toyota shares is 17.62, which is encouraging, especially since the industry average is only 13.18. So when it comes to Toyota, things are looking bullish indeed.


More from Minyanville