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NYSE:HMC is an undervalued gem with solid fundamentals.

By Mill Chart

Last update: Mar 20, 2024

HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. NYSE:HMC showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

What does the Valuation looks like for NYSE:HMC

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 9 for valuation:

  • A Price/Earnings ratio of 9.24 indicates a reasonable valuation of HMC.
  • Based on the Price/Earnings ratio, HMC is valued cheaply inside the industry as 89.74% of the companies are valued more expensively.
  • HMC is valuated cheaply when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
  • The Price/Forward Earnings ratio is 8.62, which indicates a very decent valuation of HMC.
  • 87.18% of the companies in the same industry are more expensive than HMC, based on the Price/Forward Earnings ratio.
  • The average S&P500 Price/Forward Earnings ratio is at 22.25. HMC is valued rather cheaply when compared to this.
  • 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 cheaper than 87.18% of the companies in the same industry.
  • 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.
  • A more expensive valuation may be justified as HMC's earnings are expected to grow with 17.78% in the coming years.

Exploring NYSE:HMC's Profitability

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 6 is noteworthy for profitability:

  • HMC's Return On Assets of 3.42% is fine compared to the rest of the industry. HMC outperforms 76.92% of its industry peers.
  • HMC has a Return On Equity of 7.78%. This is in the better half of the industry: HMC outperforms 76.92% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 4.28%, HMC is in the better half of the industry, outperforming 79.49% of the companies in the same industry.
  • The 3 year average ROIC (3.16%) for HMC is below the current ROIC(4.28%), indicating increased profibility in the last year.
  • With a decent Profit Margin value of 4.84%, HMC is doing good in the industry, outperforming 79.49% of the companies in the same industry.
  • Looking at the Operating Margin, with a value of 5.79%, HMC is in the better half of the industry, outperforming 79.49% of the companies in the same industry.
  • The Gross Margin of HMC (21.23%) is better than 82.05% of its industry peers.

A Closer Look at Health for NYSE:HMC

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:HMC, the assigned 5 for health provides valuable insights:

  • Looking at the Altman-Z score, with a value of 1.88, HMC is in the better half of the industry, outperforming 76.92% of the companies in the same industry.
  • HMC has a better Debt to FCF ratio (28.64) than 82.05% of its industry peers.
  • HMC has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.

Evaluating Growth: NYSE:HMC

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:HMC scores a 5 out of 10:

  • HMC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 43.86%, which is quite impressive.
  • Looking at the last year, HMC shows a quite strong growth in Revenue. The Revenue has grown by 18.20% in the last year.
  • HMC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 17.78% yearly.
  • The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
  • 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.

More Decent Value stocks can be found in our Decent Value screener.

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

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.

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HONDA MOTOR CO LTD-SPONS ADR

NYSE:HMC (5/17/2024, 7:04:12 PM)

After market: 33.24 0 (0%)

33.24

+0.42 (+1.28%)

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