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Honda Motor Co Ltd ADR HMC

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Morningstar’s Analysis

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Honda More Than Doubles Operating Profit Guidance After Strong Second Quarter

Analyst Note

| David Whiston, CFA, CPA, CFE |

Honda’s fiscal 2021 second quarter followed a pattern we’ve seen in our automaker earnings of excellent year-over-year cost reductions yielding strong earnings despite the pandemic. We are raising our fair value estimates for Honda to $34 and JPY 3,500. The change is from better fiscal 2021 results than previously modeled in light of a faster-than-expected recovery from the pandemic, higher equity income over our five-year forecast period, and the time value of money.

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Company Profile

Business Description

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. Honda sold 24.1 million cars and motorcycles in fiscal 2020 (4.8 million of which were autos), and consolidated sales were JPY 14.9 trillion. Automobiles constitute 67% of revenue and motorcycles 14%, with the rest split between power products and financial services. Honda also makes robots and private jets.

Contact
Number 1-1, Minami-Aoyama 2-chome, Minato-ku
Tokyo, 107-8556, Japan
T +81 334231111
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 36,313

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