Honda Motor Company (HMC) AI Stock Analysis

• Market Cap: $50.03B
• Dividend Yield: 3.98%
• Average Volume (3M): 1.10M
• Price to Earnings (P/E): 7.2
• Beta (1Y): 0.69
• Revenue Growth: 4.37%
• EPS Growth: 6.93%
• Country: US
• Employees: 194,993
• Sector: Consumer Cyclical
• Sector Strength: 58
• Industry: Auto - Manufacturers
• EPS (TTM): 1.31
• Shares Outstanding: 1,760,000,000
• 10 Day Avg. Volume: 729,036
• 30 Day Avg. Volume: 1,096,921
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Honda Motor Company has a robust financial position with growing revenues and a solid balance sheet, but cash flow challenges need addressing. The technical analysis indicates bullish momentum, but potential overbought conditions should be monitored. Attractive valuation metrics provide upside potential, while the mixed earnings call performance suggests some caution is warranted, especially regarding the automobile sector. Overall, Honda is positioned well, though attention to cash flow improvement and automobile sales recovery is critical.

Honda Motor Company Business Overview & Revenue Model

Company Description

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. It operates through four segments: Motorcycle Business, Automobile Business, Financial Services Business, and Life Creation and Other Businesses. The Motorcycle Business segment produces motorcycles, including sports, business, and commuter models; and various off-road vehicles, such as all-terrain vehicles and side-by-sides. The Automobile Business segment offers passenger cars, light trucks, and mini vehicles. The Financial Services Business segment provides various financial services, including retail lending and leasing services to customers, as well as wholesale financing services to dealers. The Life Creation and Other Businesses segment manufactures and sells power products, such as general purpose engines, generators, water pumps, lawn mowers, riding mowers, robotic mowers, brush cutters, tillers, snow blowers, outboard marine engines, walking assist devices, and portable battery inverter power sources. This segment also offers HondaJet aircraft. The company also sells spare parts; and provides after-sale services through retail dealers directly, as well as through independent distributors and licensees. Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Honda 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 exhibits a strong financial position with increasing revenues, robust profitability margins, and a solid balance sheet with no debt. However, cash flow challenges are a concern, particularly the negative free cash flow in the latest period, which could pose risks if not addressed.

Income Statement

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

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

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.

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

Honda Motor Company Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 30.23
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMC, the sentiment is Positive. The current price of 30.23 is above the 20-day moving average (MA) of 29.63, above the 50-day MA of 28.56, and above the 200-day MA of 28.52, indicating a bullish trend. The MACD of 0.72 indicates Negative momentum. The RSI at 58.67 is Neutral, neither overbought nor oversold. The STOCH value of 51.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HMC.

Honda Motor Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
F	78 Outperform	$41.52B	8.15	11.47%	7.29%	3.03%	28.54%
LI	76 Outperform	$25.50B	24.47	12.29%	―	15.50%	-32.48%
TM	75 Outperform	$254.22B	7.63	14.59%	2.58%	-0.59%	7.56%
HMC	74 Outperform	$50.03B	7.16	8.11%	3.98%	4.37%	6.93%
GM	71 Outperform	$43.55B	6.53	8.88%	1.05%	7.76%	-14.17%
Sector *	61 Neutral	$6.59B	11.77	3.06%	3.98%	2.56%	-20.85%
XPEV	50 Neutral	$18.42B	―	-17.11%	―	32.32%	49.34%