Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


HONDA MOTOR CO LTD-SPONS ADR

New York Stock Exchange, Inc. / Consumer Discretionary / Automobiles

Fundamental Rating

6

Overall HMC gets a fundamental rating of 6 out of 10. We evaluated HMC against 40 industry peers in the Automobiles industry. HMC has only an average score on both its financial health and profitability. A decent growth rate in combination with a cheap valuation! Better keep an eye on HMC. With these ratings, HMC could be worth investigating further for value investing!.



6

1. Profitability

1.1 Basic Checks

HMC had positive earnings in the past year.
HMC had a positive operating cash flow in the past year.
In the past 5 years HMC has always been profitable.
In the past 5 years HMC always reported a positive cash flow from operatings.

1.2 Ratios

With a decent Return On Assets value of 3.42%, HMC is doing good in the industry, outperforming 73.68% of the companies in the same industry.
HMC has a better Return On Equity (7.78%) than 73.68% of its industry peers.
HMC's Return On Invested Capital of 4.28% is fine compared to the rest of the industry. HMC outperforms 73.68% of its industry peers.
HMC had an Average Return On Invested Capital over the past 3 years of 3.16%. This is significantly below the industry average of 9.59%.
The last Return On Invested Capital (4.28%) for HMC is above the 3 year average (3.16%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 3.42%
ROE 7.78%
ROIC 4.28%
ROA(3y)2.86%
ROA(5y)2.76%
ROE(3y)6.6%
ROE(5y)6.58%
ROIC(3y)3.16%
ROIC(5y)3.19%

1.3 Margins

HMC has a Profit Margin of 4.84%. This is in the better half of the industry: HMC outperforms 78.95% of its industry peers.
In the last couple of years the Profit Margin of HMC has declined.
HMC has a Operating Margin of 5.79%. This is in the better half of the industry: HMC outperforms 76.32% of its industry peers.
In the last couple of years the Operating Margin of HMC has declined.
HMC has a Gross Margin of 21.23%. This is amongst the best in the industry. HMC outperforms 81.58% of its industry peers.
In the last couple of years the Gross Margin of HMC has declined.
Industry RankSector Rank
OM 5.79%
PM (TTM) 4.84%
GM 21.23%
OM growth 3Y2.86%
OM growth 5Y-3.18%
PM growth 3Y8.07%
PM growth 5Y-10.99%
GM growth 3Y-1.51%
GM growth 5Y-2.07%

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5

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), HMC is destroying value.
Compared to 1 year ago, HMC has less shares outstanding
The number of shares outstanding for HMC has been increased compared to 5 years ago.
The debt/assets ratio for HMC has been reduced compared to a year ago.

2.2 Solvency

An Altman-Z score of 1.86 indicates that HMC is not a great score, but indicates only limited risk for bankruptcy at the moment.
HMC has a Altman-Z score of 1.86. This is in the better half of the industry: HMC outperforms 65.79% of its industry peers.
The Debt to FCF ratio of HMC is 28.64, which is on the high side as it means it would take HMC, 28.64 years of fcf income to pay off all of its debts.
HMC has a better Debt to FCF ratio (28.64) than 78.95% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that HMC is not too dependend on debt financing.
HMC has a Debt to Equity ratio (0.45) which is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.45
Debt/FCF 28.64
Altman-Z 1.86
ROIC/WACC0.6
WACC7.16%

2.3 Liquidity

A Current Ratio of 1.45 indicates that HMC should not have too much problems paying its short term obligations.
HMC has a Current ratio (1.45) which is in line with its industry peers.
A Quick Ratio of 1.13 indicates that HMC should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.13, HMC perfoms like the industry average, outperforming 52.63% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1.45
Quick Ratio 1.13

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6

3. Growth

3.1 Past

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.
Measured over the past years, HMC shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -25.39% on average per year.
The Revenue has grown by 18.20% in the past year. This is quite good.
Measured over the past years, HMC shows a small growth in Revenue. The Revenue has been growing by 1.94% on average per year.
EPS 1Y (TTM)43.86%
EPS 3Y-19.32%
EPS 5Y-25.39%
EPS growth Q2Q8.42%
Revenue 1Y (TTM)18.2%
Revenue growth 3Y4.23%
Revenue growth 5Y1.94%
Revenue growth Q2Q21.45%

3.2 Future

The Earnings Per Share is expected to grow by 19.12% on average over the next years. This is quite good.
Based on estimates for the next years, HMC will show a quite strong growth in Revenue. The Revenue will grow by 8.04% on average per year.
EPS Next Y52.91%
EPS Next 2Y26.86%
EPS Next 3Y19.12%
EPS Next 5YN/A
Revenue Next Year18.5%
Revenue Next 2Y10.74%
Revenue Next 3Y8.04%
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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9

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 8.63 indicates a reasonable valuation of HMC.
HMC's Price/Earnings ratio is rather cheap when compared to the industry. HMC is cheaper than 86.84% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 25.25. HMC is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 7.81 indicates a rather cheap valuation of HMC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 92.11% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.67, HMC is valued rather cheaply.
Industry RankSector Rank
PE 8.63
Fwd PE 7.81

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, HMC is valued cheaply inside the industry as 92.11% of the companies are valued more expensively.
84.21% of the companies in the same industry are more expensive than HMC, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 26.12
EV/EBITDA 6.86

4.3 Compensation for Growth

The 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 19.12% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.16
PEG (5Y)N/A
EPS Next 2Y26.86%
EPS Next 3Y19.12%

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6

5. Dividend

5.1 Amount

HMC has a Yearly Dividend Yield of 6.50%, which is a nice return.
HMC's Dividend Yield is rather good when compared to the industry average which is at 2.91. HMC pays more dividend than 100.00% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, HMC pays a better dividend.
Industry RankSector Rank
Dividend Yield 6.5%

5.2 History

The dividend of HMC decreases each year by -15.40%.
HMC has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)-15.4%
Div Incr Years0
Div Non Decr Years0

5.3 Sustainability

25.79% of the earnings are spent on dividend by HMC. This is a low number and sustainable payout ratio.
DP25.79%
EPS Next 2Y26.86%
EPS Next 3Y19.12%

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