Honda Motor Company (HMC) AI Stock Analysis

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Honda Motor Company

(NYSE:HMC)

74Outperform

Honda Motor Company is financially strong with significant revenue growth and no debt, though cash flow challenges need attention. The stock appears undervalued with an attractive dividend yield, enhancing its investment appeal. While the earnings call highlighted positive trends in motorcycle sales, the decline in automobile sales and increased costs pose challenges. Overall, Honda shows moderate potential for growth, supported by its valuation and financial stability.

Honda Motor Company (HMC) vs. S&P 500 (SPY)

Market Cap

$40.82B

Dividend Yield4.38%

Average Volume (3M)1.25M

Price to Earnings (P/E)6.4

Beta (1Y)0.62

Revenue Growth4.37%

EPS Growth6.93%

CountryUS

Employees194,993

SectorConsumer Cyclical

Sector Strength55

IndustryAuto - Manufacturers

Share Statistics

EPS (TTM)4.30

Shares Outstanding1,760,000,000

10 Day Avg. Volume1,390,722

30 Day Avg. Volume1,249,387

Financial Highlights & Ratios

PEG Ratio0.93

Price to Book (P/B)N/A

Price to Sales (P/S)0.35

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusModerate Buy

Number of Analyst Covering0

Honda Motor Company Business Overview & Revenue Model

Company DescriptionHonda Motor Company, Ltd. is a Japanese multinational corporation primarily known for manufacturing automobiles, motorcycles, and power equipment. Founded in 1948, Honda has grown to become one of the largest automotive manufacturers in the world. The company operates in several business segments, including automotive, motorcycle, financial services, and power products, offering a diverse range of products such as cars, bikes, outboard motors, generators, and lawn equipment.

How the Company Makes MoneyHonda Motor Company generates revenue through multiple streams across its diverse product lines. The automotive segment is the largest revenue contributor, where Honda designs, manufactures, and sells a wide range of vehicles, including sedans, SUVs, and hybrid models. The motorcycle segment also plays a significant role, with Honda being a global leader in motorcycle manufacturing, offering models for various uses from commuter bikes to high-performance motorcycles. Additionally, Honda's power products division sells equipment like generators, lawn mowers, and outboard motors. The company also gains revenue through its financial services, which provide financing and leasing options for its automotive and motorcycle customers. Key partnerships, such as joint ventures in automotive manufacturing and technology collaborations, further enhance Honda's revenue potential and market reach.

Honda Motor Company Financial Statement Overview

Summary

Honda Motor Company presents a strong financial position with growing revenues, robust profitability margins, and an improved balance sheet with no debt. However, cash flow issues, particularly negative free cash flow in the latest period, pose a potential risk and need to be monitored closely.

Income Statement

Positive

Honda Motor Company has shown solid revenue growth with a TTM (Trailing-Twelve-Months) revenue of ¥21.76 trillion, a significant increase from previous years. The gross profit margin is healthy at approximately 21.5%, indicating efficient cost management. The net profit margin of 4.8% and EBIT margin of 6.6% in TTM highlight moderate profitability. However, the revenue growth rate from the previous annual period to TTM is around 6.5%, which, while positive, indicates a deceleration in growth. The EBITDA margin remains robust at 13.8%.

Balance Sheet

Very Positive

Honda's balance sheet is strong with total assets at ¥31.37 trillion and stockholders' equity at ¥13.07 trillion, giving an equity ratio of 41.7%, which suggests a solid financial structure. The company has managed to reduce its total debt to zero in the latest TTM, eliminating leverage risk. The return on equity (ROE) stands at 8.0% in TTM, reflecting effective use of equity to generate profit. The absence of debt in the latest period greatly enhances financial stability.

Cash Flow

Positive

The cash flow analysis for Honda shows a decline in free cash flow (FCF) to a negative ¥221.39 billion in TTM from positive values previously, indicating challenges in cash generation. The operating cash flow to net income ratio is 0.46 in TTM, suggesting that cash earnings are not fully translating into cash flow. Free cash flow to net income ratio is negative, which is concerning and warrants attention for future cash management.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
21.76T	20.43T	16.91T	14.55T	13.17T	14.93T
	Gross Profit
4.68T	4.26T	3.33T	2.98T	2.73T	3.08T
	EBIT
1.45T	1.38T	839.40B	871.23B	660.21B	633.64B
	EBITDA
3.01T	3.17T	2.40T	2.36T	2.08T	2.28T
	Net Income Common Stockholders
1.04T	1.11T	651.42B	707.07B	657.42B	455.75B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.12T	5.18T	4.07T	3.89T	3.05T	2.86T
	Total Assets
11.63T	29.77T	24.67T	23.97T	21.92T	20.46T
	Total Debt
4.13T	10.08T	7.67T	8.10T	7.72T	7.47T
	Net Debt
3.01T	5.13T	3.86T	4.43T	4.96T	4.80T
	Total Liabilities
7.17T	16.77T	13.12T	13.20T	12.55T	12.18T
	Stockholders Equity
4.33T	12.70T	11.23T	10.47T	9.08T	8.01T
Cash Flow		Free Cash Flow
-221.39B	138.61B	1.50T	1.23T	521.24B	378.16B
	Operating Cash Flow
478.88B	747.28B	2.13T	1.68T	1.07T	979.41B
	Investing Cash Flow
-962.62B	-867.27B	-678.06B	-376.06B	-796.88B	-619.48B
	Financing Cash Flow
814.79B	918.65B	-1.47T	-615.72B	-283.98B	-87.41B

Honda Motor Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price26.61

Price Trends

50DMA

27.57

Negative

100DMA

27.02

Negative

200DMA

28.63

Negative

Market Momentum

MACD

>-0.01

Positive

RSI

35.40

Neutral

STOCH

8.26

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMC, the sentiment is Negative. The current price of 26.61 is below the 20-day moving average (MA) of 27.83, below the 50-day MA of 27.57, and below the 200-day MA of 28.63, indicating a bearish trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 35.40 is Neutral, neither overbought nor oversold. The STOCH value of 8.26 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HMC.

Honda Motor Company Risk Analysis

Honda Motor Company disclosed 21 risk factors in its most recent earnings report. Honda Motor Company reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Honda Motor Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HMC	74 Outperform	$40.82B	6.42	8.11%	4.38%	4.37%	6.93%
LI	73 Outperform	$21.04B	20.15	12.29%	―	15.50%	-32.48%
F	72 Outperform	$37.78B	6.50	13.42%	8.63%	5.00%	35.92%
GM	72 Outperform	$45.51B	7.18	9.44%	1.05%	9.08%	-15.25%
TM	70 Outperform	$210.62B	6.90	14.59%	2.79%	-0.59%	7.56%
Sector *	59 Neutral	$11.76B	10.11	-0.70%	3.92%	1.27%	-16.30%
XPEV	58 Neutral	$16.71B	―	-17.11%	―	32.32%	49.34%

* Consumer Cyclical Sector Average

Performance Comparison

HMC

Honda Motor Company

26.61

-8.61

-24.45%

Ford Motor

9.14

-2.98

-24.59%

General Motors

43.73

0.32

0.74%

Toyota Motor

167.22

-79.77

-32.30%

Li Auto

22.25

-8.59

-27.85%

XPEV

XPeng, Inc. ADR

17.97

9.70

117.29%

Honda Motor Company Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -1.26% | Next Earnings Date: May 9, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed performance. While the motorcycle segment showed strong sales and operating profit increased, there were significant challenges in the automobile sector, including declining sales and increased costs. The currency effects and investment losses further added to the negative aspects. The share repurchase program and free cash flow were positive notes.

Highlights

Strong Motorcycle Sales

Motorcycle sales remained robust globally, achieving a third-quarter cumulative total of 15.5 million units, with expectations for a record high due to strong global demand.

Operating Profit Increase

Third quarter operating profit increased by 63.5 billion yen year on year, totaling 1,139.9 trillion yen.

Share Repurchase Program

A resolution was made to repurchase 1.1 trillion yen worth of company shares, with 184.9 billion yen acquired as of January 31, 2025.

Free Cash Flow

Free cash flows from the businesses, excluding financial services, were 693.7 billion yen during the first nine months.

Lowlights

Automobile Sales Decline

Consolidated automobile unit sales decreased by 297,000 units year on year, mainly due to a decline in Asia, particularly China.

Equity Method Investment Loss

Equity method investment profit decreased by 94.5 billion yen, resulting in a loss of 27.2 billion yen.

Profit Decline

Profit for the period attributable to owners of the parent company was 805.2 billion yen, down 64.3 billion yen year on year.

Increased Incentives and Costs

Increased incentives squeezed profits by 104.3 billion yen, and R&D costs rose by 97.5 billion yen.

Currency Effects

Currency effects negatively impacted profit by 56.3 billion yen.

Company Guidance

During the Honda Motor Company Ltd. FY 2025 third quarter financial results briefing, the company reported a cumulative operating profit of 1,139.9 trillion yen with a 7% operating profit margin. Motorcycle sales were strong globally, reaching 15.5 million units, while automobile sales decreased by 297,000 units year-on-year, primarily due to a decline in Asia, particularly China. Operating cash flow after R&D adjustment was consistent year-on-year at 1,945 trillion yen. The company's full-year consolidated forecasts remain unchanged with an operating profit of 1,420 trillion yen and a profit for the year of 950 billion yen. The forecast for motorcycle unit sales has been revised upward to a record high, while automobile sales have been revised downward to 3.75 million units. A resolution was made to repurchase 1.1 trillion yen worth of company shares, with 184.9 billion yen acquired as of January 31, 2025. In terms of market performance, motorcycle sales were strong in India and Brazil, while automobile sales saw increases in Japan and the United States but declined in China.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.