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

Taking everything into account, HMC scores 6 out of 10 in our fundamental rating. HMC was compared to 40 industry peers in the Automobiles industry. HMC has only an average score on both its financial health and profitability. HMC may be a bit undervalued, certainly considering the very reasonable score on growth 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.
In the past 5 years HMC has always been profitable.
HMC had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of HMC (3.42%) is better than 71.79% of its industry peers.
Looking at the Return On Equity, with a value of 7.78%, HMC is in the better half of the industry, outperforming 71.79% of the companies in the same industry.
HMC has a better Return On Invested Capital (4.28%) than 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 12.26%.
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's Profit Margin of 4.84% is fine compared to the rest of the industry. HMC outperforms 76.92% 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 74.36% of its industry peers.
HMC's Operating Margin has declined in the last couple of years.
With a decent Gross Margin value of 21.23%, HMC is doing good in the industry, outperforming 79.49% of the companies in the same industry.
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

HMC has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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.
HMC has a better debt/assets ratio than last year.

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 66.67% 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's Debt to FCF ratio of 28.64 is fine compared to the rest of the industry. HMC outperforms 79.49% 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.
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
WACC7.14%

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.
HMC has a Current ratio of 1.45. This is comparable to the rest of the industry: HMC outperforms 46.15% of its industry peers.
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 (1.13) which is in line with its industry peers.
Industry RankSector Rank
Current Ratio 1.45
Quick Ratio 1.13

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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.
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

The Earnings Per Share is expected to grow by 19.12% on average over the next years. This is quite good.
The Revenue is expected to grow by 8.04% on average over the next years. This is quite good.
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.
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.

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9

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 8.78, the valuation of HMC can be described as reasonable.
HMC's Price/Earnings ratio is rather cheap when compared to the industry. HMC is cheaper than 87.18% of the companies in the same industry.
HMC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.28.
HMC is valuated cheaply with a Price/Forward Earnings ratio of 7.96.
Based on the Price/Forward Earnings ratio, HMC is valued cheaply inside the industry as 92.31% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.88, HMC is valued rather cheaply.
Industry RankSector Rank
PE 8.78
Fwd PE 7.96

4.2 Price Multiples

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 82.05% of the companies in the same industry.
Industry RankSector Rank
P/FCF 26.6
EV/EBITDA 6.84

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.
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 6.51%, which is a nice return.
HMC's Dividend Yield is rather good when compared to the industry average which is at 3.15. HMC pays more dividend than 97.44% of the companies 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 6.51%

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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