HONDA MOTOR CO LTD-SPONS ADR (HMC)

US4381283088 - ADR

35.68  -0.14 (-0.39%)

Fundamental Rating

6

Overall HMC gets a fundamental rating of 6 out of 10. We evaluated HMC against 40 industry peers in the Automobiles industry. While HMC has a great profitability rating, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on HMC. This makes HMC very considerable for value investing!



7

1. Profitability

1.1 Basic Checks

In the past year HMC was profitable.
HMC had a positive operating cash flow in the past year.
HMC had positive earnings in each of the past 5 years.
HMC had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

Looking at the Return On Assets, with a value of 3.36%, HMC is in the better half of the industry, outperforming 79.49% of the companies in the same industry.
With a decent Return On Equity value of 7.52%, HMC is doing good in the industry, outperforming 79.49% of the companies in the same industry.
HMC has a better Return On Invested Capital (3.85%) than 79.49% of its industry peers.
HMC had an Average Return On Invested Capital over the past 3 years of 3.16%. This is significantly below the industry average of 8.30%.
The 3 year average ROIC (3.16%) for HMC is below the current ROIC(3.85%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 3.36%
ROE 7.52%
ROIC 3.85%
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

With an excellent Profit Margin value of 5.04%, HMC belongs to the best of the industry, outperforming 82.05% of the companies in the same industry.
HMC's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 5.56%, HMC belongs to the top of the industry, outperforming 82.05% of the companies in the same industry.
HMC's Operating Margin has declined in the last couple of years.
HMC has a better Gross Margin (20.83%) than 87.18% of its industry peers.
In the last couple of years the Gross Margin of HMC has declined.
Industry RankSector Rank
OM 5.56%
PM (TTM) 5.04%
GM 20.83%
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%

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
The debt/assets ratio for HMC has been reduced compared to a year ago.

2.2 Solvency

Based on the Altman-Z score of 1.80, we must say that HMC is in the distress zone and has some risk of bankruptcy.
HMC's Altman-Z score of 1.80 is fine compared to the rest of the industry. HMC outperforms 76.92% of its industry peers.
The Debt to FCF ratio of HMC is 14.48, which is on the high side as it means it would take HMC, 14.48 years of fcf income to pay off all of its debts.
HMC has a better Debt to FCF ratio (14.48) than 84.62% of its industry peers.
A Debt/Equity ratio of 0.43 indicates that HMC is not too dependend on debt financing.
The Debt to Equity ratio of HMC (0.43) is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.43
Debt/FCF 14.48
Altman-Z 1.8
ROIC/WACC0.54
WACC7.13%

2.3 Liquidity

A Current Ratio of 1.45 indicates that HMC should not have too much problems paying its short term obligations.
HMC has a Current ratio of 1.45. This is comparable to the rest of the industry: HMC outperforms 48.72% 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 comparable to the rest of the industry.
Industry RankSector Rank
Current Ratio 1.45
Quick Ratio 1.13

5

3. Growth

3.1 Past

HMC shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -3.79%.
HMC shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -25.39% yearly.
The Revenue has grown by 17.78% 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)-3.79%
EPS 3Y-19.32%
EPS 5Y-25.39%
EPS growth Q2Q39.68%
Revenue 1Y (TTM)17.78%
Revenue growth 3Y4.23%
Revenue growth 5Y1.94%
Revenue growth Q2Q17.12%

3.2 Future

The Earnings Per Share is expected to grow by 17.51% on average over the next years. This is quite good.
Based on estimates for the next years, HMC will show a quite strong growth in Revenue. The Revenue will grow by 8.40% on average per year.
EPS Next Y52.1%
EPS Next 2Y25.87%
EPS Next 3Y17.51%
EPS Next 5YN/A
Revenue Next Year18.27%
Revenue Next 2Y10.94%
Revenue Next 3Y8.4%
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.

9

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 9.03, the valuation of HMC can be described as very reasonable.
Based on the Price/Earnings ratio, HMC is valued cheaper than 87.18% of the companies in the same industry.
When comparing the Price/Earnings ratio of HMC to the average of the S&P500 Index (26.15), we can say HMC is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 8.15, the valuation of HMC can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 89.74% of the companies listed in the same industry.
HMC's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.62.
Industry RankSector Rank
PE 9.03
Fwd PE 8.15

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 94.87% of the companies listed in the same industry.
HMC's Price/Free Cash Flow ratio is rather cheap when compared to the industry. HMC is cheaper than 87.18% of the companies in the same industry.
Industry RankSector Rank
P/FCF 13.94
EV/EBITDA 7.33

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.
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 17.51% in the coming years.
PEG (NY)0.17
PEG (5Y)N/A
EPS Next 2Y25.87%
EPS Next 3Y17.51%

6

5. Dividend

5.1 Amount

HMC has a Yearly Dividend Yield of 6.45%, which is a nice return.
Compared to an average industry Dividend Yield of 2.82, HMC pays a better dividend. On top of this HMC pays more dividend than 100.00% of the companies listed in the same industry.
HMC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.45.
Industry RankSector Rank
Dividend Yield 6.45%

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.
HMC has decreased its dividend in the last 3 years.
Dividend Growth(5Y)-15.4%
Div Incr Years2
Div Non Decr Years2

5.3 Sustainability

HMC pays out 21.75% of its income as dividend. This is a sustainable payout ratio.
DP21.75%
EPS Next 2Y25.87%
EPS Next 3Y17.51%

HONDA MOTOR CO LTD-SPONS ADR

NYSE:HMC (2/26/2024, 11:45:35 AM)

35.68

-0.14 (-0.39%)

Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupAutomobiles & Components
GICS IndustryAutomobiles
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap57.68B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 6.45%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
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EPS beat(8)
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EPS beat(16)
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Revenue beat(2)
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Min Revenue beat(2)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 9.03
Fwd PE 8.15
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)0.17
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 3.36%
ROE 7.52%
ROCE
ROIC
ROICexc
ROICexgc
OM 5.56%
PM (TTM) 5.04%
GM 20.83%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.67
Health
Industry RankSector Rank
Debt/Equity 0.43
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 1.45
Quick Ratio 1.13
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-3.79%
EPS 3Y-19.32%
EPS 5Y
EPS growth Q2Q
EPS Next Y52.1%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)17.78%
Revenue growth 3Y4.23%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y