NYSE:HMC is probably undervalued for the fundamentals it is displaying.

Last update: Oct 3, 2023

Uncover the hidden value in HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) as our stock screening tool recommends it as an undervalued choice. NYSE:HMC maintains a robust financial position and offers an attractive pricing perspective. Let's dig deeper into the analysis.

A Closer Look at Valuation for NYSE:HMC

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:

HMC is valuated reasonably with a Price/Earnings ratio of 9.15.
86.84% 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 25.50, HMC is valued rather cheaply.
A Price/Forward Earnings ratio of 8.27 indicates a reasonable valuation of HMC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HMC indicates a rather cheap valuation: HMC is cheaper than 86.84% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 18.66. HMC is valued rather cheaply when compared to this.
HMC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. HMC is cheaper than 89.47% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, HMC is valued cheaper than 94.74% 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.

Exploring NYSE:HMC's Profitability

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 7 is noteworthy for profitability:

With a decent Return On Assets value of 3.27%, HMC is doing good in the industry, outperforming 78.95% of the companies in the same industry.
HMC has a better Return On Equity (7.21%) than 76.32% of its industry peers.
Looking at the Return On Invested Capital, with a value of 3.73%, HMC is in the better half of the industry, outperforming 76.32% of the companies in the same industry.
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 Profit Margin of 4.89%. This is amongst the best in the industry. HMC outperforms 81.58% of its industry peers.
HMC's Operating Margin of 5.38% is amongst the best of the industry. HMC outperforms 81.58% of its industry peers.
HMC's Gross Margin of 20.13% is amongst the best of the industry. HMC outperforms 84.21% of its industry peers.

A Closer Look at Health 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 5 for health:

HMC's Altman-Z score of 1.81 is fine compared to the rest of the industry. HMC outperforms 71.05% of its industry peers.
The Debt to FCF ratio of HMC (7.69) is better than 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

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:HMC scores a 5 out of 10:

The Earnings Per Share has grown by an impressive 46.62% over the past year.
Looking at the last year, HMC shows a quite strong growth in Revenue. The Revenue has grown by 19.63% in the last year.
Based on estimates for the next years, HMC will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.63% on average per year.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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.