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NYSE:HMC is an undervalued gem with solid fundamentals.

By Mill Chart

Last update: Dec 6, 2023

Our stock screening tool has pinpointed HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) as an undervalued stock option. NYSE:HMC retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Understanding NYSE:HMC's Valuation Score

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:HMC, the assigned 9 reflects its valuation:

  • With a Price/Earnings ratio of 7.59, the valuation of HMC can be described as very cheap.
  • 89.74% of the companies in the same industry are more expensive than HMC, based on the Price/Earnings ratio.
  • Compared to an average S&P500 Price/Earnings ratio of 24.81, HMC is valued rather cheaply.
  • HMC is valuated cheaply with a Price/Forward Earnings ratio of 6.98.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 87.18% of the companies listed in the same industry.
  • HMC is valuated cheaply when we compare the Price/Forward Earnings ratio to 19.91, which is the current average of the S&P500 Index.
  • Based on the Enterprise Value to EBITDA ratio, HMC is valued cheaply inside the industry as 94.87% of the companies are valued more expensively.
  • Based on the Price/Free Cash Flow ratio, HMC is valued cheaply inside the industry as 87.18% of the companies are valued more expensively.
  • HMC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • The decent profitability rating of HMC may justify a higher PE ratio.
  • HMC's earnings are expected to grow with 18.03% in the coming years. This may justify a more expensive valuation.

Evaluating Profitability: NYSE:HMC

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:HMC, the assigned 7 is noteworthy for profitability:

  • HMC's Return On Assets of 3.36% is fine compared to the rest of the industry. HMC outperforms 79.49% of its industry peers.
  • The Return On Equity of HMC (7.52%) is better than 76.92% of its industry peers.
  • HMC's Return On Invested Capital of 3.85% is fine compared to the rest of the industry. HMC outperforms 79.49% of its industry peers.
  • The last Return On Invested Capital (3.85%) for HMC is above the 3 year average (3.16%), which is a sign of increasing profitability.
  • With an excellent Profit Margin value of 5.04%, HMC belongs to the best of the industry, outperforming 82.05% of the companies in the same industry.
  • The Operating Margin of HMC (5.56%) is better than 82.05% of its industry peers.
  • HMC has a better Gross Margin (20.83%) than 89.74% of its industry peers.

How do we evaluate the Health for NYSE:HMC?

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:HMC has earned a 5 out of 10:

  • The Altman-Z score of HMC (1.75) is better than 74.36% of its industry peers.
  • HMC's Debt to FCF ratio of 14.48 is amongst the best of the industry. HMC outperforms 84.62% of its industry peers.
  • A Debt/Equity ratio of 0.43 indicates that HMC is not too dependend on debt financing.

Evaluating Growth: NYSE:HMC

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:HMC, the assigned 4 reflects its growth potential:

  • Looking at the last year, HMC shows a quite strong growth in Revenue. The Revenue has grown by 17.78% in the last year.
  • The Earnings Per Share is expected to grow by 18.03% on average over the next years. This is quite good.
  • 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.
  • The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of HMC

Keep in mind

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 (2/23/2024, 7:04:00 PM)

After market: 35.82 0 (0%)

35.82

+0.08 (+0.22%)

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