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 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. This makes HMC very considerable 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.
HMC had positive earnings in each of the past 5 years.
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 71.79% of the companies in the same industry.
HMC has a better Return On Equity (7.78%) than 71.79% of its industry peers.
With a decent Return On Invested Capital value of 4.28%, HMC is doing good in the industry, outperforming 71.79% of the companies in the same industry.
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.
HMC's Profit Margin has declined in the last couple of years.
HMC has a Operating Margin of 5.79%. This is in the better half of the industry: HMC outperforms 74.36% of its industry peers.
In the last couple of years the Operating Margin of HMC has declined.
HMC's Gross Margin of 21.23% is fine compared to the rest of the industry. HMC outperforms 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%

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5

2. Health

2.1 Basic Checks

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

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.
The Altman-Z score of HMC (1.86) is better than 64.10% 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 Debt to FCF ratio of 28.64. This is in the better half of the industry: HMC outperforms 79.49% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that HMC is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.45, HMC is in line with its industry, outperforming 43.59% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.45
Debt/FCF 28.64
Altman-Z 1.86
ROIC/WACC0.6
WACC7.15%

2.3 Liquidity

HMC has a Current Ratio of 1.45. This is a normal value and indicates that HMC is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.45, HMC is in line with its industry, outperforming 46.15% of the companies in the same industry.
A Quick Ratio of 1.13 indicates that HMC should not have too much problems paying its short term obligations.
HMC has a Quick ratio of 1.13. This is comparable to the rest of the industry: HMC outperforms 53.85% of its industry peers.
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.
Looking at the last year, HMC shows a quite strong growth in Revenue. The Revenue has grown by 18.20% in the last year.
The Revenue has been growing slightly by 1.94% on average over the past years.
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

HMC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.12% yearly.
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

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.

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9

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 8.81 indicates a reasonable valuation of HMC.
Compared to the rest of the industry, the Price/Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 87.18% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.55, HMC is valued rather cheaply.
With a Price/Forward Earnings ratio of 7.97, the valuation of HMC can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 92.31% of the companies listed in the same industry.
HMC is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.92, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 8.81
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.
82.05% 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 26.65
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.
HMC has a very decent profitability rating, which 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%

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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 3.12, HMC pays a better dividend. On top of this HMC pays more dividend than 97.44% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, HMC pays a better dividend.
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

HMC pays out 25.79% of its income as dividend. This is a sustainable payout ratio.
DP25.79%
EPS Next 2Y26.86%
EPS Next 3Y19.12%

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