We assign a fundamental rating of 5 out of 10 to HMC. HMC was compared to 35 industry peers in the Automobiles industry. While HMC belongs to the best of the industry regarding profitability, there are concerns on its financial health. HMC is valued correctly, but it does not seem to be growing.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year HMC was profitable.
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

HMC has a Return On Assets of 2.07%. This is amongst the best in the industry. HMC outperforms 82.86% of its industry peers.
HMC has a Return On Equity of 5.46%. This is amongst the best in the industry. HMC outperforms 82.86% of its industry peers.
With an excellent Return On Invested Capital value of 2.77%, HMC belongs to the best of the industry, outperforming 82.86% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for HMC is in line with the industry average of 5.26%.

		Industry Rank	Sector Rank
ROA	2.07%
ROE	5.46%
ROIC	2.77%

ROA(3y)3.02%

ROA(5y)3%

ROE(3y)7.11%

ROE(5y)7.06%

ROIC(3y)3.54%

ROIC(5y)3.3%

1.3 Margins

The Profit Margin of HMC (3.03%) is better than 85.71% of its industry peers.
In the last couple of years the Profit Margin of HMC has grown nicely.
With an excellent Operating Margin value of 4.22%, HMC belongs to the best of the industry, outperforming 88.57% of the companies in the same industry.
HMC's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 20.75%, HMC belongs to the best of the industry, outperforming 85.71% of the companies in the same industry.
In the last couple of years the Gross Margin of HMC has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	4.22%
PM (TTM)	3.03%
GM	20.75%

OM growth 3Y-2.23%

OM growth 5Y5.68%

PM growth 3Y-7.43%

PM growth 5Y4.77%

GM growth 3Y1.59%

GM growth 5Y0.84%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so HMC is still creating some value.
HMC has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, HMC has more shares outstanding
Compared to 1 year ago, HMC has a worse debt to assets ratio.

2.2 Solvency

HMC has an Altman-Z score of 1.60. This is a bad value and indicates that HMC is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of HMC (1.60) is better than 77.14% of its industry peers.
A Debt/Equity ratio of 0.68 indicates that HMC is somewhat dependend on debt financing.
HMC has a Debt to Equity ratio of 0.68. This is comparable to the rest of the industry: HMC outperforms 51.43% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.68
Debt/FCF	N/A
Altman-Z	1.6

ROIC/WACC0.96

WACC2.89%

2.3 Liquidity

A Current Ratio of 1.41 indicates that HMC should not have too much problems paying its short term obligations.
HMC's Current ratio of 1.41 is in line compared to the rest of the industry. HMC outperforms 57.14% of its industry peers.
A Quick Ratio of 1.13 indicates that HMC should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.13, HMC is in the better half of the industry, outperforming 68.57% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.41
Quick Ratio	1.13

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

HMC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -25.93%.
HMC shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.59% yearly.
HMC shows a decrease in Revenue. In the last year, the revenue decreased by -0.43%.
Measured over the past years, HMC shows a small growth in Revenue. The Revenue has been growing by 7.75% on average per year.

EPS 1Y (TTM)-25.93%

EPS 3Y9.3%

EPS 5Y15.59%

EPS Q2Q%35.23%

Revenue 1Y (TTM)-0.43%

Revenue growth 3Y14.23%

Revenue growth 5Y7.75%

Sales Q2Q%-1.86%

3.2 Future

The Earnings Per Share is expected to grow by 8.62% on average over the next years. This is quite good.
The Revenue is expected to grow by 1.75% on average over the next years.

EPS Next Y-30.02%

EPS Next 2Y4.78%

EPS Next 3Y8.62%

EPS Next 5YN/A

Revenue Next Year-2.02%

Revenue Next 2Y1.13%

Revenue Next 3Y1.75%

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 decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 10.04, the valuation of HMC can be described as very reasonable.
HMC's Price/Earnings ratio is rather cheap when compared to the industry. HMC is cheaper than 91.43% of the companies in the same industry.
HMC is valuated cheaply when we compare the Price/Earnings ratio to 28.30, which is the current average of the S&P500 Index.
HMC is valuated cheaply with a Price/Forward Earnings ratio of 7.73.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 91.43% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.57. HMC is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	10.04
Fwd PE	7.73

4.2 Price Multiples

91.43% of the companies in the same industry are more expensive than HMC, based on the Enterprise Value to EBITDA ratio.

		Industry Rank	Sector Rank
P/FCF	N/A
EV/EBITDA	7.7

4.3 Compensation for Growth

The excellent profitability rating of HMC may justify a higher PE ratio.

PEG (NY)N/A

PEG (5Y)0.64

EPS Next 2Y4.78%

EPS Next 3Y8.62%

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5. Dividend

5.1 Amount

HMC has a Yearly Dividend Yield of 4.27%, which is a nice return.
HMC's Dividend Yield is rather good when compared to the industry average which is at 0.84. HMC pays more dividend than 94.29% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 1.82, HMC pays a better dividend.

		Industry Rank	Sector Rank
Dividend Yield	4.27%

5.2 History

The dividend of HMC decreases each year by -7.66%.
HMC has paid a dividend for at least 10 years, which is a reliable track record.

Dividend Growth(5Y)-7.66%

Div Incr Years0

Div Non Decr Years0

5.3 Sustainability

47.07% of the earnings are spent on dividend by HMC. This is a bit on the high side, but may be sustainable.

DP47.07%

EPS Next 2Y4.78%

EPS Next 3Y8.62%

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HONDA MOTOR CO LTD-SPONS ADR / HMC FAQ

What is the fundamental rating for HMC stock?

ChartMill assigns a fundamental rating of 5 / 10 to HMC.

Can you provide the valuation status for HONDA MOTOR CO LTD-SPONS ADR?

ChartMill assigns a valuation rating of 6 / 10 to HONDA MOTOR CO LTD-SPONS ADR (HMC). This can be considered as Fairly Valued.

Can you provide the profitability details for HONDA MOTOR CO LTD-SPONS ADR?

HONDA MOTOR CO LTD-SPONS ADR (HMC) has a profitability rating of 8 / 10.

What is the valuation of HONDA MOTOR CO LTD-SPONS ADR based on its PE and PB ratios?

The Price/Earnings (PE) ratio for HONDA MOTOR CO LTD-SPONS ADR (HMC) is 10.04 and the Price/Book (PB) ratio is 0.5.

What is the financial health of HONDA MOTOR CO LTD-SPONS ADR (HMC) stock?

The financial health rating of HONDA MOTOR CO LTD-SPONS ADR (HMC) is 3 / 10.