Honda Motor Company (HMC) AI Stock Analysis

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Honda Motor Company

(NYSE:HMC)

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Outperform 77 (OpenAI - 4o)

Rating:77Outperform

Price Target:

$39.00

▲(16.94% Upside)

Honda Motor Company's stock score is driven by strong technical analysis indicators and reasonable valuation metrics. The financial performance is solid, but cash flow volatility and rising liabilities need attention. The earnings call highlighted both positive achievements and significant challenges, slightly tempering the overall score.

Honda Motor Company (HMC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$45.04B

Dividend Yield4.15%

Average Volume (3M)749.41K

Price to Earnings (P/E)11.9

Beta (1Y)0.62

Revenue Growth1.68%

EPS Growth-39.28%

CountryUS

Employees194,993

SectorConsumer Cyclical

Sector Strength84

IndustryAuto - Manufacturers

Share Statistics

EPS (TTM)46.80

Shares Outstanding1,760,000,000

10 Day Avg. Volume637,926

30 Day Avg. Volume749,407

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.99

Enterprise Value/Revenue<0.01

Enterprise Value/Gross Profit0.02

Enterprise Value/Ebitda0.05

Forecast

1Y Price Target

$39.00

Price Target Upside16.94% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Honda Motor Company Business Overview & Revenue Model

Company DescriptionHonda 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 MoneyHonda generates revenue primarily through the sale of its automotive and motorcycle products. The company's automotive division contributes a significant portion of its earnings, offering a wide range of vehicles from compact cars to SUVs and luxury models under the Acura brand. Additionally, Honda's motorcycle division is a leading player in the global market, providing a variety of motorcycles for different segments, including sport bikes and scooters. Other key revenue streams include sales of power equipment, such as generators and lawn mowers, as well as revenue from financing and leasing services offered through Honda Financial Services. Strategic partnerships with technology firms and investments in research and development further enhance Honda's competitive edge, allowing the company to innovate and diversify its offerings, which in turn drives sales and profitability.

Honda Motor Company Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Shows revenue contributions from each business area, indicating which segments are growing, stable, or declining, and providing insight into the company's strategic focus and market positioning.

Chart InsightsHonda's motorcycle segment is experiencing robust growth, achieving record highs in unit sales and operating profit margins, driven by strong demand and strategic positioning. In contrast, the automobile segment faces challenges, particularly in China and ASEAN, with declining unit sales and tariff impacts. However, hybrid EV sales are expanding, suggesting a strategic pivot towards electrification. Financial services and power products show steady performance, but the overall outlook is cautious due to tariff policies and electrification strategy challenges, impacting profitability and necessitating strategic adjustments.

Data provided by:

Main Street Data

Honda Motor Company Earnings Call Summary

Earnings Call Date:Aug 06, 2025

(Q1-2026)

% Change Since: |

Next Earnings Date:Nov 05, 2025

Earnings Call Sentiment Negative

The earnings call reflected a mix of positive achievements such as the record operating profit in the Motorcycle segment and revised profit forecasts. However, these were overshadowed by significant challenges including a sharp decline in overall operating profit, losses in the Automobile segment, and ongoing tariff and currency issues.

Q1-2026 Updates

Positive Updates

Record Operating Profit in Motorcycle Segment

The Motorcycle operations achieved a record high operating profit for a quarter period, driven by sales expansion in Brazil and Vietnam. The operating profit for motorcycles was JPY 189 billion, up by JPY 11.3 billion year-on-year.

Revised Forecast for Fiscal Year

Honda Motor Company revised its forecast for the full fiscal year ending March 2026, projecting an increase in operating profit to JPY 700 billion, up by JPY 200 billion from the previous forecast. The net profit for the year is expected to be JPY 420 billion, reflecting a JPY 170 billion increase.

Successful Share Buyback

Honda successfully acquired shares worth JPY 936.5 billion as part of its JPY 1.1 trillion share buyback program announced in December 2024.

Negative Updates

Significant Decline in Operating Profit

Honda's operating profit for the first quarter was JPY 244.1 billion, a decrease of JPY 240.5 billion compared to the same period last year.

Automobile Segment Losses

The Automobile operations reported an operating loss of JPY 29.6 billion, with sales declines primarily in China and other Asian regions.

Challenges with Tariffs and Currency Effects

Tariffs led to a decline in profit by JPY 124.6 billion, while currency effects resulted in a negative impact of JPY 86.1 billion.

Underperformance in China Market

Sales in China have been declining for 17 consecutive months, with challenges in meeting market expectations for EVs.

Company Guidance

In the recent financial results call, Honda Motor Company provided guidance for the fiscal year ending March 2026. The company revised its full-year forecast upwards, projecting an operating profit of JPY 700 billion, an increase of JPY 200 billion from the previous forecast, and a net profit of JPY 420 billion, up by JPY 170 billion. The forecast assumes an exchange rate of JPY 140 against the U.S. dollar. Honda's first-quarter operating profit stood at JPY 244.1 billion, though this was JPY 240.5 billion lower than the same period last year. Key factors influencing the operating profit included a positive impact of JPY 109.1 billion from increased unit sales in North America, a JPY 68.5 billion positive impact from pricing revisions, and negative impacts from expenses, tariffs, and currency effects totaling JPY 293.6 billion. The company also highlighted its substantial share buyback program, which, as of July 31, amounted to JPY 936.5 billion out of the resolved JPY 1.1 trillion. Honda's guidance reflects adjustments to tariff impacts and exchange rate assumptions, with continued challenges anticipated from policy changes and nonrecurring expenses related to electric vehicles (EVs).

Honda Motor Company Financial Statement Overview

Summary

Honda Motor Company exhibits strong financial health with consistent income growth and solid balance sheet metrics. While profitability remains high, and leverage is managed well, cash flow volatility and rising liabilities present areas for improvement. The company is well-positioned in the auto manufacturing industry, but it must address cash flow management to sustain long-term growth.

Income Statement

Positive

Honda Motor Company has shown consistent revenue growth over the years, with a notable increase from 2021 to 2025. The gross profit margin and net profit margin remained stable, showcasing efficient cost management. Despite a slight decline in EBIT margin in 2025, the EBITDA margin indicates strong operational performance. Overall, the company demonstrates robust income-generating capability with healthy profitability.

Balance Sheet

Positive

Honda's balance sheet reflects a strong equity position, with the equity ratio showing a solid percentage of total assets funded by shareholders' equity. The debt-to-equity ratio has decreased over time, indicating improved leverage management. Return on equity is steady, reflecting efficient utilization of shareholder funds. However, there is a potential risk from total liabilities, which have increased alongside assets, suggesting a need for cautious financial management.

Cash Flow

Positive

The cash flow analysis shows volatility in free cash flow, with a significant decline in 2025 due to increased capital expenditures. Operating cash flow remains positive but has decreased compared to previous years. The operating cash flow to net income ratio indicates effective cash generation relative to net income, though the decreasing trend suggests potential cash flow challenges. Overall, Honda's cash flow management is satisfactory but requires attention to maintain stability.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	21.62T	21.69T	20.43T	16.91T	14.55T	13.17T
Gross Profit	4.54T	4.66T	4.26T	3.33T	2.98T	2.73T
EBITDA	1.84T	2.12T	3.17T	2.40T	2.36T	2.08T
Net Income	637.85B	835.84B	1.11T	651.42B	707.07B	657.42B
Balance Sheet
Total Assets	29.87T	30.78T	29.77T	24.67T	23.97T	21.92T
Cash, Cash Equivalents and Short-Term Investments	4.17T	4.74T	5.18T	4.07T	3.89T	3.05T
Total Debt	0.00	4.42T	10.08T	7.67T	8.05T	7.72T
Total Liabilities	17.81T	18.15T	16.77T	13.12T	13.20T	12.55T
Stockholders Equity	11.80T	12.33T	12.70T	11.23T	10.47T	9.08T
Cash Flow
Free Cash Flow	-307.39B	-555.28B	138.61B	1.50T	1.23T	521.24B
Operating Cash Flow	459.07B	292.15B	747.28B	2.13T	1.68T	1.07T
Investing Cash Flow	-959.45B	-941.97B	-867.27B	-678.06B	-376.06B	-796.88B
Financing Cash Flow	-126.59B	280.48B	918.65B	-1.47T	-615.72B	-283.98B

Honda Motor Company Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price33.35

Price Trends

50DMA

32.96

Positive

100DMA

31.34

Positive

200DMA

29.38

Positive

Market Momentum

MACD

0.21

Positive

RSI

47.11

Neutral

STOCH

23.47

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMC, the sentiment is Neutral. The current price of 33.35 is below the 20-day moving average (MA) of 34.00, above the 50-day MA of 32.96, and above the 200-day MA of 29.38, indicating a neutral trend. The MACD of 0.21 indicates Positive momentum. The RSI at 47.11 is Neutral, neither overbought nor oversold. The STOCH value of 23.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HMC.

Honda Motor Company Risk Analysis

Honda Motor Company disclosed 22 risk factors in its most recent earnings report. Honda Motor Company reported the most risks in the "Macro & Political" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

3. Laws and Regulations Concerning Human Rights Q1, 2023

1. Economic Security Q1, 2023

Geopolitical Risk Q1, 2023

Honda Motor Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TM	83 Outperform	257.53B	9.17	13.26%	2.71%	4.14%	-12.12%
HMC	77 Outperform	$45.04B	11.86	5.17%	4.15%	1.68%	-39.28%
TSLA	76 Outperform	1.37T	246.74	7.90%	―	-2.73%	-51.64%
GM	75 Outperform	56.15B	9.35	7.19%	0.92%	5.34%	-28.29%
LI	74 Outperform	25.96B	24.44	11.33%	―	7.49%	-21.06%
F	73 Outperform	46.25B	14.83	6.99%	6.45%	2.72%	-17.58%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

* Consumer Cyclical Sector Average

Performance Comparison

HMC

Honda Motor Company

33.35

1.68

5.30%

Ford Motor

11.62

1.48

14.60%

General Motors

58.98

11.44

24.06%

TSLA

Tesla

426.07

176.07

70.43%

Toyota Motor

198.95

13.55

7.31%

Li Auto

25.75

3.55

15.99%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 20, 2025