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Honda Motor Co Ltd ADR HMC

Morningstar Rating
$35.98 −0.09 (0.25%)
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Company Report

Honda Earnings: Weak Yen Against the Dollar and Strong Auto Volumes Boost Third-Quarter Results

Honda’s fiscal 2024 third-quarter results gave us no reason to change our fair value estimate, but we slightly increase our fiscal 2024 profit forecast after management raised its operating income guidance by JPY 50 billion to JPY 1.25 trillion and EPS of JPY 195.83, up from JPY 189.64. The guidance increase comes mostly from an extra JPY 53-billion foreign currency benefit relative to prior guidance, with JPY 17.5 billion of that amount from a weaker yen against the U.S. dollar. We see good potential for Honda beating its guidance, given the yen remains at nearly JPY 150 to the dollar, which is weaker than management’s full-year assumption of JPY 142 (had been JPY 140), because U.S. demand for Honda’s vehicles remains very strong. Management is taking this extra JPY 50 billion of operating income to announce a new share repurchase program for March and April of up to JPY 50 billion and 34 million shares. The full-year fiscal 2024 split-adjusted dividend remains on track for JPY 58 per share.

Price vs Fair Value

HMC is trading at a 8% discount.
Price
$35.98
Fair Value
$46.00
Uncertainty
High
1-Star Price
$83.95
5-Star Price
$61.50
Economic Moat
Ngqk
Capital Allocation
Wcswpcrn

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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Trading Information

Previous Close Price
$36.07
Day Range
$35.8236.09
52-Week Range
$24.6036.82
Bid/Ask
$35.67 / $35.96
Market Cap
$58.16 Bil
Volume/Avg
10 / 1.0 Mil

Key Statistics

Price/Earnings (Normalized)
8.47
Price/Sales
0.43
Dividend Yield (Trailing)
2.84%
Dividend Yield (Forward)
2.84%
Total Yield
6.25%

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
MBGAF
F
Price/Earnings (Normalized)
8.475.376.27
Price/Book Value
0.680.891.19
Price/Sales
0.430.520.29
Price/Cash Flow
4.673.743.74
Price/Earnings
HMC
MBGAF
F

Financial Strength

Metric
HMC
MBGAF
F
Quick Ratio
1.070.831.01
Current Ratio
1.451.241.20
Interest Coverage
27.5362.152.82
Quick Ratio
HMC
MBGAF
F

Profitability

Metric
HMC
MBGAF
F
Return on Assets (Normalized)
3.87%5.98%3.08%
Return on Equity (Normalized)
8.59%17.96%18.80%
Return on Invested Capital (Normalized)
4.54%8.72%4.23%
Return on Assets
HMC
MBGAF
F
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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
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TM
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MBGAF
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BMWYY
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RACE
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VWAPY
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F
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