HONDA MOTOR CO LTD-SPONS ADR (HMC) Stock Fundamental Analysis
NYSE:HMC - New York Stock Exchange, Inc. - US4381283088 - ADR - Currency: USD
HMC gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 38 industry peers in the Automobiles industry. While HMC has a great profitability rating, there are quite some concerns on its financial health. HMC is cheap, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
HMC had positive earnings in the past year.
HMC had a positive operating cash flow in the past year.
In the past 5 years HMC has always been profitable.
Each year in the past 5 years HMC had a positive operating cash flow.
1.2 Ratios
HMC has a better Return On Assets (2.72%) than 78.95% of its industry peers.
The Return On Equity of HMC (6.78%) is better than 76.32% of its industry peers.
The Return On Invested Capital of HMC (3.85%) is better than 76.32% of its industry peers.
HMC had an Average Return On Invested Capital over the past 3 years of 3.64%. This is below the industry average of 6.56%.
The 3 year average ROIC (3.64%) for HMC is below the current ROIC(3.85%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.72% | ||
| ROE | 6.78% | ||
| ROIC | 3.85% |
ROA(3y)3.02%
ROA(5y)3%
ROE(3y)7.11%
ROE(5y)7.06%
ROIC(3y)3.64%
ROIC(5y)3.36%
1.3 Margins
HMC's Profit Margin of 3.85% is amongst the best of the industry. HMC outperforms 84.21% of its industry peers.
In the last couple of years the Profit Margin of HMC has grown nicely.
Looking at the Operating Margin, with a value of 5.59%, HMC belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.
In the last couple of years the Operating Margin of HMC has grown nicely.
HMC has a better Gross Margin (21.50%) than 86.84% of its industry peers.
HMC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 5.59% | ||
| PM (TTM) | 3.85% | ||
| GM | 21.5% |
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%
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.
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 1.66. This is a bad value and indicates that HMC is not financially healthy and even has some risk of bankruptcy.
HMC's Altman-Z score of 1.66 is fine compared to the rest of the industry. HMC outperforms 78.95% of its industry peers.
A Debt/Equity ratio of 0.56 indicates that HMC is somewhat dependend on debt financing.
HMC's Debt to Equity ratio of 0.56 is fine compared to the rest of the industry. HMC outperforms 60.53% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1.66 |
ROIC/WACC0.59
WACC6.48%
2.3 Liquidity
A Current Ratio of 1.36 indicates that HMC should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.36, HMC is in the better half of the industry, outperforming 65.79% of the companies in the same industry.
A Quick Ratio of 1.07 indicates that HMC should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.07, HMC is in the better half of the industry, outperforming 68.42% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.07 |
3. Growth
3.1 Past
HMC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -13.09%.
The Earnings Per Share has been decreasing by -5.47% on average over the past years.
The Revenue has been growing slightly by 6.17% in the past year.
The Revenue has been growing slightly by 7.75% on average over the past years.
EPS 1Y (TTM)-13.09%
EPS 3Y-18.47%
EPS 5Y-5.47%
EPS Q2Q%-45.76%
Revenue 1Y (TTM)6.17%
Revenue growth 3Y14.23%
Revenue growth 5Y7.75%
Sales Q2Q%-4.19%
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 12.59% on average per year.
HMC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.72% yearly.
EPS Next Y14.42%
EPS Next 2Y12.59%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year0.52%
Revenue Next 2Y1.72%
Revenue Next 3YN/A
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 7.02, the valuation of HMC can be described as very cheap.
Compared to the rest of the industry, the Price/Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 89.47% of the companies listed in the same industry.
HMC is valuated cheaply when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
HMC is valuated cheaply with a Price/Forward Earnings ratio of 6.13.
HMC's Price/Forward Earnings ratio is rather cheap when compared to the industry. HMC is cheaper than 92.11% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.76. HMC is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.02 | ||
| Fwd PE | 6.13 |
4.2 Price Multiples
89.47% 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 | 6.46 |
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 excellent profitability rating of HMC may justify a higher PE ratio.
HMC's earnings are expected to grow with 12.59% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.49
PEG (5Y)N/A
EPS Next 2Y12.59%
EPS Next 3YN/A
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.92%, HMC is a good candidate for dividend investing.
HMC's Dividend Yield is rather good when compared to the industry average which is at 3.58. HMC pays more dividend than 94.74% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, HMC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.92% |
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
41.61% of the earnings are spent on dividend by HMC. This is a bit on the high side, but may be sustainable.
DP41.61%
EPS Next 2Y12.59%
EPS Next 3YN/A
29.5
-0.02 (-0.07%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupAutomobiles & Components
GICS IndustryAutomobiles
Earnings (Last)
Earnings (Next)
Inst Owners43.86%
Inst Owner Change0.03%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap42.74B
Analysts77.6
Price Target35.78 (21.29%)
Short Float %0.5%
Short Ratio5.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.92% |
Yearly Dividend1.62
Dividend Growth(5Y)-7.66%
DP41.61%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-2.71%
Min EPS beat(2)-24.71%
Max EPS beat(2)19.29%
EPS beat(4)2
Avg EPS beat(4)-15.74%
Min EPS beat(4)-68.3%
Max EPS beat(4)19.29%
EPS beat(8)5
Avg EPS beat(8)8.87%
EPS beat(12)6
Avg EPS beat(12)3.36%
EPS beat(16)10
Avg EPS beat(16)13.24%
Revenue beat(2)1
Avg Revenue beat(2)-1.01%
Min Revenue beat(2)-3.82%
Max Revenue beat(2)1.81%
Revenue beat(4)3
Avg Revenue beat(4)-0.05%
Min Revenue beat(4)-3.82%
Max Revenue beat(4)1.81%
Revenue beat(8)4
Avg Revenue beat(8)-0.29%
Revenue beat(12)6
Avg Revenue beat(12)-0.16%
Revenue beat(16)8
Avg Revenue beat(16)0.05%
PT rev (1m)0.57%
PT rev (3m)15.26%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-13.39%
EPS NY rev (1m)0%
EPS NY rev (3m)4.26%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.41%
Revenue NY rev (1m)1.18%
Revenue NY rev (3m)1.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 7.02 | ||
| Fwd PE | 6.13 | ||
| P/S | 0.28 | ||
| P/FCF | N/A | ||
| P/OCF | 20.98 | ||
| P/B | 0.5 | ||
| P/tB | 0.55 | ||
| EV/EBITDA | 6.46 |
EPS(TTM)4.2
EY14.24%
EPS(NY)4.81
Fwd EY16.31%
FCF(TTM)-2.67
FCFYN/A
OCF(TTM)1.41
OCFY4.77%
SpS104.38
BVpS59.32
TBVpS53.9
PEG (NY)0.49
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.72% | ||
| ROE | 6.78% | ||
| ROCE | 5.48% | ||
| ROIC | 3.85% | ||
| ROICexc | 4.89% | ||
| ROICexgc | 5.23% | ||
| OM | 5.59% | ||
| PM (TTM) | 3.85% | ||
| GM | 21.5% | ||
| FCFM | N/A |
ROA(3y)3.02%
ROA(5y)3%
ROE(3y)7.11%
ROE(5y)7.06%
ROIC(3y)3.64%
ROIC(5y)3.36%
ROICexc(3y)4.65%
ROICexc(5y)4.25%
ROICexgc(3y)4.94%
ROICexgc(5y)15.11%
ROCE(3y)5.42%
ROCE(5y)5.03%
ROICexcg growth 3Y-46.73%
ROICexcg growth 5Y7.95%
ROICexc growth 3Y6.2%
ROICexc growth 5Y7.78%
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%
F-Score4
Asset Turnover0.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 3.55 | ||
| Cap/Depr | 114.08% | ||
| Cap/Sales | 3.91% | ||
| Interest Coverage | 2.76 | ||
| Cash Conversion | 14.93% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.07 | ||
| Altman-Z | 1.66 |
F-Score4
WACC6.48%
ROIC/WACC0.59
Cap/Depr(3y)92.78%
Cap/Depr(5y)88.03%
Cap/Sales(3y)3.54%
Cap/Sales(5y)3.58%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-13.09%
EPS 3Y-18.47%
EPS 5Y-5.47%
EPS Q2Q%-45.76%
EPS Next Y14.42%
EPS Next 2Y12.59%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)6.17%
Revenue growth 3Y14.23%
Revenue growth 5Y7.75%
Sales Q2Q%-4.19%
Revenue Next Year0.52%
Revenue Next 2Y1.72%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y-12.19%
EBIT growth 3Y11.68%
EBIT growth 5Y13.88%
EBIT Next Year25226.9%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-500.6%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-60.9%
OCF growth 3Y-44.18%
OCF growth 5Y-21.49%