It's been a heckuva ride for Japan's largest car company, Toyota (NYSE:TM). While American makers like Ford (NYSE:F) and General Motors (NYSE:GM) implode, Toyota goes merrily on its way to building arguably the best global auto and light-truck franchise.

Fourth-quarter results certainly didn't slide off the road. Sales were up about 18%, while reported operating income rose 53%, and net income climbed 39%. Free cash flow growth was also quite strong on a year-over-year basis, though a bit more restrained when it came to structural free cash flow (a.k.a. owner earnings).

Production rose 7% in the fourth quarter, and vehicle sales (measured in units) were up 8% -- matching the full-year result. The company specifically stated that it added share in Japan (approaching 46%), and though it didn't provide statistics on the North American markets, I'll bet it continues to gain share over here as well.

While investors often focus on Toyota's U.S. performance and talk about its lead in new technologies like hybrids, I wouldn't ignore its performance in Japan, either. Based on my reading of the numbers, Japanese sales are more than twice as profitable as U.S. sales on an operating-margin basis. Japan is an invaluable cash-generating segment for Toyota, with sales nearly twice those in North America.

Toyota is in a great position. It has well-liked brands and free cash to invest in new (and state-of-the-art) plants and plentiful R&D. What's more, Toyota can manage earnings to some extent; profits above its long-term targets can be reinvested in R&D during fat years or trimmed back as needed in lean ones.

I'd like to hear a bit more from Toyota about ethanol-powered automobiles, since that segment might be General Motors' and Ford's best chance to regain some strength. Unlike hydrogen, ethanol is easy to dispense via current technologies, and countries like Brazil have successfully used it as all but a replacement for gasoline.

Having climbed more than 50% over the past year, it's hard to call this stock a bargain, and currency moves could make business a bit more challenging. Still, my cash flow model doesn't suggest that it's too overvalued, and it's not always wise to part with best-of-breed stocks just because of a few percentage points' deviation from fair value.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).