For those who appreciate value investing, NYSE:HMC is a compelling option with its solid fundamentals.

Last update: Sep 22, 2023

Our stock screener has singled out HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) as a stellar value proposition. NYSE:HMC not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

Understanding NYSE:HMC's Valuation Score

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:HMC was assigned a score of 9 for valuation:

With a Price/Earnings ratio of 9.55, the valuation of HMC can be described as very reasonable.
83.78% of the companies in the same industry are more expensive than HMC, based on the Price/Earnings ratio.
HMC is valuated cheaply when we compare the Price/Earnings ratio to 25.93, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 8.62, the valuation of HMC can be described as very reasonable.
Based on the Price/Forward Earnings ratio, HMC is valued cheaper than 86.49% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 19.01. HMC is valued rather cheaply when compared to this.
89.19% of the companies in the same industry are more expensive than HMC, based on the Enterprise Value to EBITDA ratio.
HMC's Price/Free Cash Flow ratio is rather cheap when compared to the industry. HMC is cheaper than 97.30% of the companies in the same industry.
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.
HMC's earnings are expected to grow with 15.63% in the coming years. This may justify a more expensive valuation.

Analyzing Profitability Metrics

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:HMC, the assigned 6 is noteworthy for profitability:

With a decent Return On Assets value of 3.27%, HMC is doing good in the industry, outperforming 75.68% of the companies in the same industry.
HMC's Return On Equity of 7.21% is fine compared to the rest of the industry. HMC outperforms 72.97% of its industry peers.
The Return On Invested Capital of HMC (3.73%) is better than 75.68% of its industry peers.
The 3 year average ROIC (3.16%) for HMC is below the current ROIC(3.73%), indicating increased profibility in the last year.
The Profit Margin of HMC (4.89%) is better than 81.08% of its industry peers.
With a decent Operating Margin value of 5.38%, HMC is doing good in the industry, outperforming 78.38% of the companies in the same industry.
HMC has a better Gross Margin (20.13%) than 83.78% of its industry peers.

What does the Health looks like for NYSE:HMC

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:HMC, the assigned 6 for health provides valuable insights:

Looking at the Altman-Z score, with a value of 1.82, HMC is in the better half of the industry, outperforming 67.57% of the companies in the same industry.
The Debt to FCF ratio of HMC (7.69) is better than 83.78% of its industry peers.
HMC has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.

Assessing Growth for NYSE:HMC

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:HMC boasts a 5 out of 10:

HMC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 46.62%, which is quite impressive.
HMC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.63%.
HMC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.63% yearly.
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.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of HMC for a complete fundamental analysis.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.