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For those who appreciate value investing, NYSE:HMC is a compelling option with its solid fundamentals.

By Mill Chart

Last update: Oct 24, 2023

HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) was identified as a decent value stock by our stock screener. NYSE:HMC scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

Deciphering NYSE:HMC's Valuation Rating

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:HMC has earned a 8 for valuation:

  • With a Price/Earnings ratio of 8.80, the valuation of HMC can be described as very reasonable.
  • 86.84% of the companies in the same industry are more expensive than HMC, based on the Price/Earnings ratio.
  • HMC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.91.
  • A Price/Forward Earnings ratio of 7.48 indicates a rather cheap valuation of HMC.
  • HMC's Price/Forward Earnings ratio is rather cheap when compared to the industry. HMC is cheaper than 89.47% of the companies in the same industry.
  • HMC is valuated cheaply when we compare the Price/Forward Earnings ratio to 18.49, which is the current average of the S&P500 Index.
  • Based on the Enterprise Value to EBITDA ratio, HMC is valued cheaper than 89.47% of the companies in the same industry.
  • Based on the Price/Free Cash Flow ratio, HMC is valued cheaper than 94.74% of the companies in the same industry.
  • The decent profitability rating of HMC may justify a higher PE ratio.

How do we evaluate the Profitability for NYSE:HMC?

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:HMC has achieved a 7:

  • The Return On Assets of HMC (3.27%) is better than 78.95% of its industry peers.
  • HMC has a Return On Equity of 7.21%. This is in the better half of the industry: HMC outperforms 76.32% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 3.73%, HMC is in the better half of the industry, outperforming 78.95% of the companies in the same industry.
  • The last Return On Invested Capital (3.73%) for HMC is above the 3 year average (3.16%), which is a sign of increasing profitability.
  • HMC's Profit Margin of 4.89% is amongst the best of the industry. HMC outperforms 81.58% of its industry peers.
  • HMC has a better Operating Margin (5.38%) than 81.58% of its industry peers.
  • HMC has a better Gross Margin (20.13%) than 89.47% of its industry peers.

Health Insights: NYSE:HMC

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:HMC has received a 5 out of 10:

  • HMC's Altman-Z score of 1.80 is fine compared to the rest of the industry. HMC outperforms 78.95% of its industry peers.
  • The Debt to FCF ratio of HMC (7.69) is better than 84.21% of its industry peers.
  • HMC has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.

Looking at the Growth

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:HMC has earned a 4 for growth:

  • HMC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.63%.
  • When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
  • When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Check the latest full fundamental report of HMC for a complete fundamental analysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.

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HONDA MOTOR CO LTD-SPONS ADR

NYSE:HMC (2/21/2024, 7:04:00 PM)

After market: 35.53 +0.59 (+1.69%)

34.94

+0.31 (+0.9%)

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