NYSE:HMC is an undervalued gem with solid fundamentals.

Our stock screening tool has pinpointed HONDA MOTOR CO LTD-SPONS ADR (NYSE:HMC) as an undervalued stock option. NYSE:HMC retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

How We Gauge Valuation for NYSE:HMC

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:HMC, the assigned 9 reflects its valuation:

• Based on the Price/Earnings ratio of 7.93, the valuation of HMC can be described as very cheap.
• 89.47% of the companies in the same industry are more expensive than HMC, based on the Price/Earnings ratio.
• HMC's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.68.
• A Price/Forward Earnings ratio of 7.17 indicates a rather cheap valuation of HMC.
• Based on the Price/Forward Earnings ratio, HMC is valued cheaper than 89.47% of the companies in the same industry.
• HMC is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.65, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, HMC is valued cheaply inside the industry as 94.74% of the companies are valued more expensively.
• HMC's Price/Free Cash Flow ratio is rather cheap when compared to the industry. HMC is cheaper than 86.84% 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.
• The decent profitability rating of HMC may justify a higher PE ratio.
• A more expensive valuation may be justified as HMC's earnings are expected to grow with 17.44% 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 7:

• Looking at the Return On Assets, with a value of 3.36%, HMC is in the better half of the industry, outperforming 78.95% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 7.52%, HMC is in the better half of the industry, outperforming 78.95% of the companies in the same industry.
• HMC's Return On Invested Capital of 3.85% is fine compared to the rest of the industry. HMC outperforms 78.95% of its industry peers.
• The last Return On Invested Capital (3.85%) for HMC is above the 3 year average (3.16%), which is a sign of increasing profitability.
• Looking at the Profit Margin, with a value of 5.04%, HMC belongs to the top of the industry, outperforming 81.58% of the companies in the same industry.
• With an excellent Operating Margin value of 5.56%, HMC belongs to the best of the industry, outperforming 81.58% of the companies in the same industry.
• HMC has a better Gross Margin (20.83%) than 89.47% of its industry peers.

Health Assessment of NYSE:HMC

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:HMC, the assigned 5 reflects its health status:

• With a decent Altman-Z score value of 1.76, HMC is doing good in the industry, outperforming 73.68% of the companies in the same industry.
• With an excellent Debt to FCF ratio value of 14.48, HMC belongs to the best of the industry, outperforming 84.21% of the companies in the same industry.
• HMC has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.

Assessing Growth Metrics for NYSE:HMC

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:HMC has received a 4 out of 10:

• HMC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 17.78%.
• HMC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 17.44% 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.
• The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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

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

Disclaimer

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.