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

HMC gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 40 industry peers in the Automobiles industry. HMC has an average financial health and profitability rating. HMC is valued quite cheap, while showing a decent growth score. This is a good combination! These ratings could make HMC a good candidate for value investing.



6

1. Profitability

1.1 Basic Checks

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

1.2 Ratios

The Return On Assets of HMC (3.42%) is better than 71.79% of its industry peers.
HMC has a better Return On Equity (7.78%) than 71.79% of its industry peers.
HMC has a Return On Invested Capital of 4.28%. This is in the better half of the industry: HMC outperforms 71.79% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HMC is significantly below the industry average of 12.29%.
The 3 year average ROIC (3.16%) for HMC is below the current ROIC(4.28%), indicating increased profibility in the last year.
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

Looking at the Profit Margin, with a value of 4.84%, HMC is in the better half of the industry, outperforming 76.92% of the companies in the same industry.
In the last couple of years the Profit Margin of HMC has declined.
Looking at the Operating Margin, with a value of 5.79%, HMC is in the better half of the industry, outperforming 74.36% of the companies in the same industry.
HMC's Operating Margin has declined in the last couple of years.
The Gross Margin of HMC (21.23%) is better than 79.49% of its industry peers.
HMC's Gross Margin has declined in the last couple of years.
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%

More info and screens

5

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so HMC is destroying value.
HMC has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, HMC has more shares outstanding
HMC has a better debt/assets ratio than last year.

2.2 Solvency

HMC has an Altman-Z score of 1.86. This is not the best score and indicates that HMC is in the grey zone with still only limited risk for bankruptcy at the moment.
HMC has a better Altman-Z score (1.86) than 66.67% of its industry peers.
HMC has a debt to FCF ratio of 28.64. This is a negative value and a sign of low solvency as HMC would need 28.64 years to pay back of all of its debts.
The Debt to FCF ratio of HMC (28.64) is better than 76.92% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that HMC is not too dependend on debt financing.
The Debt to Equity ratio of HMC (0.45) 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
WACC7.15%

2.3 Liquidity

A Current Ratio of 1.45 indicates that HMC should not have too much problems paying its short term obligations.
The Current ratio of HMC (1.45) is comparable to the rest of the industry.
HMC has a Quick Ratio of 1.13. This is a normal value and indicates that HMC is financially healthy and should not expect problems in meeting its short term obligations.
HMC has a Quick ratio (1.13) which is in line with its industry peers.
Industry RankSector Rank
Current Ratio 1.45
Quick Ratio 1.13

More info and screens

6

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 43.86% over the past year.
The earnings per share for HMC have been decreasing by -25.39% on average. This is quite bad
The Revenue has grown by 18.20% in the past year. This is quite good.
HMC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.94% yearly.
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.
HMC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.04% yearly.
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

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.

More info and screens

9

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 8.79, 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/Earnings ratio.
HMC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.84.
HMC is valuated cheaply with a Price/Forward Earnings ratio of 7.97.
Based on the Price/Forward Earnings ratio, HMC is valued cheaper than 92.31% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of HMC to the average of the S&P500 Index (21.35), we can say HMC is valued rather cheaply.
Industry RankSector Rank
PE 8.79
Fwd PE 7.97

4.2 Price Multiples

94.87% of the companies in the same industry are more expensive than HMC, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 82.05% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 26.65
EV/EBITDA 6.84

4.3 Compensation for Growth

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 19.12% in the coming years.
PEG (NY)0.17
PEG (5Y)N/A
EPS Next 2Y26.86%
EPS Next 3Y19.12%

More info and screens

6

5. Dividend

5.1 Amount

HMC has a Yearly Dividend Yield of 6.64%, which is a nice return.
Compared to an average industry Dividend Yield of 2.94, HMC pays a better dividend. On top of this HMC pays more dividend than 100.00% of the companies listed in the same industry.
HMC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.41.
Industry RankSector Rank
Dividend Yield 6.64%

5.2 History

The dividend of HMC decreases each year by -15.40%.
HMC has paid a dividend for at least 10 years, which is 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%

More info and screens