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Honda Motor Co Ltd ADR HMC

Morningstar Rating
$33.24 +0.42 (1.28%)
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Company Report

Honda Earnings: Good Finish to Fiscal 2024 but Fiscal 2025 Equity Income Guidance Is Poor

Honda announced fourth-quarter and year-end fiscal 2024 results on May 10 that included fiscal 2025 guidance of flat revenue growth. Fiscal 2025 guidance is for a 0.2% year-over-year increase in operating income to JPY 1.42 trillion, with operating margin up 20 basis points to 7%. Pricing is expected to add JPY 502 billion and offset higher costs in research as well as a JPY 201 billion currency headwind. Pretax profit, however, is guided down 8.7% due to a 91% expected decrease in equity method income, likely due to struggles in China. This change to our model and its flow through our explicit forecast causes us to lower our per share fair value estimates to $35 from $39 and JPY 1,800 from JPY 1,900. Guidance assumes the yen strengthening against the US dollar to JPY 140 from JPY 145 in fiscal 2024, so there could be some upside coming to guidance if the yen remains around JPY 156. EPS guidance is JPY 210.23, slightly below the JPY 223.56 LSEG May 9 consensus, and a 6.9% decline from fiscal 2024's JPY 225.88.

Price vs Fair Value

HMC is trading at a 492% premium.
Price
$33.24
Fair Value
$35.00
Uncertainty
High
1-Star Price
$14.96
5-Star Price
$92.00
Economic Moat
Bcfkm
Capital Allocation
Zyxpdgt

Bulls Say, Bears Say

Bulls

The popularity of Honda's vehicles usually allow it to use fewer incentives than the Detroit Three, boosting the firm's profits and improving the resale value of its vehicles.

Bears

Environmental laws are becoming stricter, which will make cars more expensive to produce and more expensive for consumers to buy. Honda, for now, is lagging in battery electric vehicle offerings relative to other firms.

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News

Trading Information

Previous Close Price
$32.82
Day Range
$33.0933.32
52-Week Range
$28.1137.90
Bid/Ask
$32.69 / $33.25
Market Cap
$53.46 Bil
Volume/Avg
616,178 / 1.0 Mil

Key Statistics

Price/Earnings (Normalized)
7.82
Price/Sales
0.38
Dividend Yield (Trailing)
2.48%
Dividend Yield (Forward)
2.48%
Total Yield
5.75%

Company Profile

Incorporated in 1948, Honda Motor was originally a motorcycle manufacturer. Today, the firm makes automobiles, motorcycles, and power products such as boat engines, generators, and lawnmowers. Including joint ventures, Honda sold 22.4 million cars and motorcycles in fiscal 2023 (3.7 million of which were autos), and consolidated sales were JPY 16.9 trillion. Automobiles constitute 63% of revenue and motorcycles 17%, with the rest split between power products and financial services. Honda also makes robots and private jets.
Sector
Consumer Cyclical
Industry
Auto Manufacturers
Stock Style Box
Large Value
Total Number of Employees
197,039

Competitors

Valuation

Metric
HMC
NSANY
BMW
Price/Earnings (Normalized)
7.823.775.88
Price/Book Value
0.640.340.67
Price/Sales
0.380.150.36
Price/Cash Flow
4.181.802.80
Price/Earnings
HMC
NSANY
BMW

Financial Strength

Metric
HMC
NSANY
BMW
Quick Ratio
1.071.360.74
Current Ratio
1.451.751.13
Interest Coverage
27.537.9122.80
Quick Ratio
HMC
NSANY
BMW

Profitability

Metric
HMC
NSANY
BMW
Return on Assets (Normalized)
3.87%2.64%4.56%
Return on Equity (Normalized)
8.59%8.81%12.88%
Return on Invested Capital (Normalized)
4.54%3.75%6.26%
Return on Assets
HMC
NSANY
BMW
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