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Honda Motor Co Ltd (JP:7267)
:7267
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Honda Motor Co
(OTC:7267)
71Outperform
Positive Factors
Dividend Policy
Honda has changed its dividend policy to dividends on equity (DOE), raising its dividend per share from ¥68 in results to ¥70 in guidance.
Motorcycle Business
Stable business model backed by highly profitable motorcycle business.
Share Buybacks
Honda reconfirmed its commitment to continuing share buybacks, which may be a step forward towards ending the run of bad news.
Negative Factors
Exchange Rates
The effects of exchange rates including emerging market currencies are expected to hold back profit.
Profit Forecast
FY3/26 guidance is for operating profit to fall 59% year over year, assuming ¥135/$ and factoring in the impact of tariffs, much lower than expected.
Tariffs
Proposed 25% tariffs on Mexico and Canada could lead to higher operating costs for Honda.
Honda Motor Co (7267) vs. S&P 500 (SPY)
Market Cap
$6.80T
Dividend Yield4.75%
Average Volume (3M)20.47M
Price to Earnings (P/E)7.9
Beta (1Y)1.20
Revenue Growth12.25%
EPS Growth15.01%
CountryJP
Employees194,993
SectorConsumer Cyclical
Sector Strength75
IndustryAuto - Manufacturers
Share Statistics
EPS (TTM)9.24
Shares Outstanding5,280,000,000
10 Day Avg. Volume15,170,450
30 Day Avg. Volume20,468,353
Financial Highlights & Ratios
PEG Ratio0.94
Price to Book (P/B)0.53
Price to Sales (P/S)0.00
P/FCF Ratio-32.29
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$1,535.47Price Target Upside7.98% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Honda Motor Co 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 Motor Co. makes money through several key revenue streams. The primary source of revenue is its automotive division, which generates income from the sale of cars, SUVs, and trucks worldwide. This includes popular models like the Honda Civic, Accord, CR-V, and the Acura luxury brand. The motorcycle division is another significant contributor, with Honda being one of the largest motorcycle manufacturers globally, offering a range of models from commuter bikes to high-performance sports motorcycles. Additionally, Honda's power products division provides revenue through the sale of equipment such as generators, lawnmowers, and outboard motors. The company also earns from financial services, providing financing solutions for the purchase of its vehicles, and has strategic partnerships and joint ventures, particularly in the areas of electric vehicles and autonomous driving technologies, enhancing its product offerings and market reach.
Honda Motor Co Financial Statement Overview
Summary
Honda Motor Co exhibits strong financial performance with excellent revenue growth and a robust balance sheet. The company effectively manages its costs, as reflected in healthy profit margins, while maintaining a solid equity position with no debt. However, the decline in free cash flow suggests a need for careful cash management.Income Statement
Honda Motor Co demonstrates strong revenue growth, with TTM (Trailing-Twelve-Months) revenue increasing significantly compared to the previous year. The company has maintained a solid gross profit margin and net profit margin, indicating effective cost management. However, there is a slight decline in net income compared to the previous annual period, suggesting room for improvement in profit retention.85
Very Positive
Balance Sheet
The balance sheet is strong, with a robust equity position and no total debt in the TTM period, indicating sound financial health. The equity ratio is healthy, reflecting a stable financial structure. The return on equity shows effective use of shareholder funds, although there's potential for further improvement.90
Very Positive
Cash Flow
Honda's cash flow statement indicates positive operating cash flow, but there is a decline in free cash flow in the TTM period, which could impact future investments and financial flexibility. The operating cash flow to net income ratio is positive, showing good cash generation relative to profits.75
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 21.76T | 20.43T | 16.91T | 14.55T | 13.17T | 14.93T | Gross Profit |
| 4.68T | 4.41T | 3.33T | 2.98T | 2.73T | 3.08T | EBIT |
| 1.45T | 1.38T | 839.40B | 871.23B | 660.21B | 633.64B | EBITDA |
| 3.03T | 2.70T | 2.40T | 2.36T | 2.08T | 2.28T | Net Income Common Stockholders |
| 1.04T | 1.11T | 651.42B | 707.07B | 657.42B | 455.75B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 4.96T | 5.18T | 4.07T | 3.89T | 3.05T | 2.86T | Total Assets |
| 31.37T | 29.77T | 24.67T | 23.97T | 21.92T | 20.46T | Total Debt |
| 11.56T | 10.50T | 7.67T | 8.10T | 7.72T | 7.47T | Net Debt |
| 6.60T | 5.54T | 3.86T | 4.43T | 4.96T | 4.80T | Total Liabilities |
| 18.00T | 16.77T | 13.12T | 13.20T | 12.55T | 12.18T | Stockholders Equity |
| 13.07T | 12.70T | 11.23T | 10.47T | 9.08T | 8.01T |
| Cash Flow | Free Cash Flow | ||||
| -221.39B | 138.61B | 1.50T | 1.23T | 521.24B | 378.16B | Operating Cash Flow |
| 478.88B | 747.28B | 2.13T | 1.68T | 1.07T | 979.41B | Investing Cash Flow |
| -962.62B | -867.27B | -678.06B | -376.06B | -796.88B | -619.48B | Financing Cash Flow |
| 814.79B | 918.65B | -1.47T | -615.72B | -283.98B | -87.41B |
Honda Motor Co Technical Analysis
Neutral
1422.00
Price Trends
1403.22
Positive
1403.82
Positive
1418.52
Positive
Market Momentum
11.96
Positive
49.99
Neutral
22.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7267, the sentiment is Neutral. The current price of 1422 is below the 20-day moving average (MA) of 1438.83, above the 50-day MA of 1403.22, and above the 200-day MA of 1418.52, indicating a neutral trend. The MACD of 11.96 indicates Positive momentum. The RSI at 49.99 is Neutral, neither overbought nor oversold. The STOCH value of 22.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7267.
Honda Motor Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Performance Comparison
JP:7267
Honda Motor Co
1,422.00
-246.85
-14.79%
GB:TYT
Toyota Motor
2,672.50
-652.81
-19.63%
FUJHF
SUBARU
18.38
-1.95
-9.59%
NSANF
Nissan Motor Co
2.43
-1.12
-31.55%
SZKMF
Suzuki Motor
12.36
0.82
7.11%
TYIDF
Toyota
125.76
32.28
34.53%
Honda Motor Co Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q4-2025)
| % Change Since: -4.47%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in the motorcycle business and a strategic increase in dividends, but was overshadowed by significant challenges in the automobile segment, including tariff impacts and postponed investments. Overall, the sentiment is balanced with both positive and negative aspects having significant weight.Q4-2025 Updates
Positive Updates
Record Operating Profit in Motorcycle Business
The motorcycle business achieved record highs in unit sales, operating profit, and operating profit margin, with an operating profit of JPY 663.4 billion, up by JPY 107.2 billion year-on-year.
Strong Operating Cash Flow
Operating cash flow after R&D adjustments remained high, reaching JPY 2.800 trillion, consistent with the previous fiscal year.
Dividend Increase
Honda announced a dividend policy change, increasing the annual dividend by JPY 2 from JPY 68 to JPY 70 per share.
Hybrid Electric Vehicle Sales Expansion
Hybrid EV sales expanded, particularly in North America, which contributed positively to the overall automobile business.
Negative Updates
Decline in Automobile Business Profit
The automobile business saw operating profit decline by JPY 189.1 billion year-on-year, impacted by a reduction in sales volume and increased incentives to boost EV sales.
Significant Impact of Tariff Policies
Tariff policies are expected to have a significant impact, with a projected JPY 650 billion impact, complicating the formulation of the financial outlook for the fiscal year ending March 2026.
Postponement of Canadian Investment
Due to a slower than expected growth in the North American EV market, the large-scale investment in Canada for EV production has been postponed for at least two years.
Decrease in Overall Net Profit
Net profit attributable to the owner of the parent decreased by JPY 271.3 billion, totaling JPY 835.8 billion.
Company Guidance
In the recent financial results call, Honda presented its fiscal year 2025 performance and provided guidance for fiscal year 2026. The operating profit for FYE March 2025 was JPY 1.213.4 trillion, with a one-time adjustment for automobile warranty provisions, bringing the figure to JPY 1.341 trillion. The motorcycle segment achieved record sales and profits, whereas the automobile segment faced challenges with declining sales in China and ASEAN, affected by increased EV incentives in North America. For FYE March 2026, Honda anticipates a minimum operating profit of JPY 500 billion and a net profit of JPY 250 billion, factoring in tariff policy impacts. Sales of hybrid EVs are expected to rise, especially in North America. Additionally, Honda plans to increase dividend payments from JPY 68 to JPY 70 per share and has repurchased JPY 589.5 billion worth of shares as part of a JPY 1.1 trillion buyback program. Honda is also reevaluating its electrification strategy due to the slowing growth of the EV market and has postponed a major investment in Canada for two years.Honda Motor Co Corporate Events
Honda Announces Executive Leadership Change
Apr 10, 2025
Honda Motor Co., Ltd. announced a planned change in its executive leadership, with Katsushi Inoue set to be appointed as a Director and Senior Managing Executive Officer following the upcoming Ordinary General Meeting of Shareholders in June 2025. This change reflects Honda’s strategic approach to strengthen its leadership team and potentially enhance its operational effectiveness and market positioning.
Honda Executive Resigns Amid Allegations, Company Pledges Compliance Overhaul
Apr 7, 2025
Honda Motor Co., Ltd. has announced the resignation of Shinji Aoyama, its Director, Executive Vice President, and Representative Executive Officer, following allegations of inappropriate conduct during a social gathering. The company has taken this matter seriously, with President Toshihiro Mibe voluntarily returning part of his compensation and emphasizing the restoration of trust and strengthening of compliance systems as top priorities.
Honda Announces Progress in Share Buyback Program
Apr 2, 2025
Honda Motor Co., Ltd. announced the acquisition of 62,915,200 shares of its own common stock, amounting to 91,225,041,103 yen, during March 2025. This move is part of a larger plan authorized by the Board of Directors to acquire up to 1,100,000,000 shares by the end of 2025, reflecting a strategic effort to enhance shareholder value and optimize capital structure.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.