NYSE:HMC is a prime example of a stock that offers more than what meets the eye in terms of fundamentals.

Last update: Sep 26, 2023

Our stock screening tool has pinpointed HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) as an undervalued stock. NYSE:HMC maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Deciphering NYSE:HMC's Valuation Rating

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:HMC has received a 9 out of 10:

The Price/Earnings ratio is 9.59, which indicates a very decent valuation of HMC.
84.21% of the companies in the same industry are more expensive than HMC, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 25.92, HMC is valued rather cheaply.
A Price/Forward Earnings ratio of 8.65 indicates a reasonable valuation of HMC.
Based on the Price/Forward Earnings ratio, HMC is valued cheaply inside the industry as 86.84% of the companies are valued more expensively.
HMC's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 19.00.
89.47% 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 97.37% of the companies in the same industry.
HMC's 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.
A more expensive valuation may be justified as HMC's earnings are expected to grow with 15.63% in the coming years.

Looking at the Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:HMC has achieved a 6:

HMC has a Return On Assets of 3.27%. This is in the better half of the industry: HMC outperforms 76.32% of its industry peers.
HMC's Return On Equity of 7.21% is fine compared to the rest of the industry. HMC outperforms 73.68% of its industry peers.
HMC has a better Return On Invested Capital (3.73%) than 76.32% of its industry peers.
The last Return On Invested Capital (3.73%) for HMC is above the 3 year average (3.16%), which is a sign of increasing profitability.
HMC has a better Profit Margin (4.89%) than 81.58% of its industry peers.
HMC's Operating Margin of 5.38% is fine compared to the rest of the industry. HMC outperforms 78.95% of its industry peers.
HMC has a better Gross Margin (20.13%) than 84.21% of its industry peers.

Assessing Health Metrics for NYSE:HMC

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:HMC was assigned a score of 6 for health:

HMC's Altman-Z score of 1.83 is fine compared to the rest of the industry. HMC outperforms 71.05% of its industry peers.
HMC's Debt to FCF ratio of 7.69 is amongst the best of the industry. HMC outperforms 84.21% 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.

Growth Assessment of 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.
The Revenue has grown by 19.63% in the past year. This is quite good.
The Earnings Per Share is expected to grow by 15.63% on average over the next years. This is quite good.
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.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of HMC

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.