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. Both the profitability and the financial health of HMC get a neutral evaluation. Nothing too spectacular is happening here. HMC is valued quite cheap, while showing a decent growth score. This is a good combination! 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.
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

HMC has a better Return On Assets (3.42%) than 73.68% of its industry peers.
HMC's Return On Equity of 7.78% is fine compared to the rest of the industry. HMC outperforms 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.
The Average Return On Invested Capital over the past 3 years for HMC 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's Profit Margin of 4.84% is fine compared to the rest 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's Operating Margin of 5.79% is fine compared to the rest of the industry. HMC outperforms 76.32% of its industry peers.
HMC's Operating Margin has declined in the last couple of years.
The Gross Margin of HMC (21.23%) is better than 81.58% 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.
The number of shares outstanding for HMC has been reduced compared to 1 year ago.
Compared to 5 years ago, HMC has more shares outstanding
Compared to 1 year ago, HMC has an improved debt to assets ratio.

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 68.42% 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.
Looking at the Debt to FCF ratio, with a value of 28.64, HMC is in the better half of the industry, outperforming 78.95% of the companies in the same industry.
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
WACC7.11%

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 (1.45) which is comparable to the rest of the industry.
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

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
HMC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 18.20%.
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

Based on estimates for the next years, HMC will show a quite strong growth in Earnings Per Share. The EPS will grow by 19.12% on average per year.
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

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.

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9

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 8.72 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.
Compared to an average S&P500 Price/Earnings ratio of 25.20, HMC is valued rather cheaply.
With a Price/Forward Earnings ratio of 7.90, 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 92.11% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of HMC to the average of the S&P500 Index (21.63), we can say HMC is valued rather cheaply.
Industry RankSector Rank
PE 8.72
Fwd PE 7.9

4.2 Price Multiples

HMC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. HMC is cheaper than 92.11% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 84.21% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 26.4
EV/EBITDA 6.78

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)0.16
PEG (5Y)N/A
EPS Next 2Y26.86%
EPS Next 3Y19.12%

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6

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 6.50%, HMC is a good candidate for dividend investing.
HMC's Dividend Yield is rather good when compared to the industry average which is at 2.87. HMC pays more dividend than 100.00% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, 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 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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