Honda Motor Co., Ltd. (7267) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

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Comparison

Company

Score

Quality

Valuation

Financial

Technical

Toyota Motor Corp.

Mazda Motor Corp.

Suzuki Motor Corp.

Isuzu Motors Ltd.

Yamaha Motor Co., Ltd.

Subaru Corp.

Honda Motor Co., Ltd.

Hino Motors, Ltd.

Shimano, Inc.

Nissan Motor Co., Ltd.

Mitsubishi Motors Corp.

Why is Honda Motor Co., Ltd. ?

Poor Management Efficiency with a low ROCE of 5.93%

The company has been able to generate a Return on Capital Employed (avg) of 5.93% signifying low profitability per unit of total capital (equity and debt)

High Debt Company with a Debt to Equity ratio (avg) at times

Poor long term growth as Operating profit has grown by an annual rate 13.88% of over the last 5 years
High Debt Company with a Debt to Equity ratio (avg) at times
The company has been able to generate a Return on Equity (avg) of 7.59% signifying low profitability per unit of shareholders funds

The company has declared Negative results for the last 3 consecutive quarters

NET PROFIT(HY) At JPY 227,244 MM has Grown at -64.06%
OPERATING CASH FLOW(Y) Lowest at JPY 459,074 MM
ROCE(HY) Lowest at 5.06%

With ROCE of 6.30%, it has a very attractive valuation with a 0.74 Enterprise value to Capital Employed

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of 19.59%, its profits have fallen by -23.6%

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Honda Motor Co., Ltd. should be less than 10%
Overall Portfolio exposure to Automobiles should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Automobiles)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Honda Motor Co., Ltd. for you?

Low Risk, High Return

Absolute

Risk Adjusted

Volatility

Honda Motor Co., Ltd.

19.59%

155.59

35.70%

Japan Nikkei 225

28.54%

1.11

25.75%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

7.75%

EBIT Growth (5y)

13.88%

EBIT to Interest (avg)

33.23

Debt to EBITDA (avg)

2.70

Net Debt to Equity (avg)

0.56

Sales to Capital Employed (avg)

0.90

Tax Ratio

31.49%

Dividend Payout Ratio

38.00%

Pledged Shares

Institutional Holding

0.05%

ROCE (avg)

5.93%

ROE (avg)

7.59%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

0.59

EV to EBIT

11.73

EV to EBITDA

7.27

EV to Capital Employed

0.74

EV to Sales

0.66

PEG Ratio

Dividend Yield

ROCE (Latest)

6.30%

ROE (Latest)

7.33%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bearish

Mildly Bullish

RSI

No Signal

Bollinger Bands

Mildly Bearish

Mildly Bullish

Moving Averages

Bullish (Daily)

KST

Mildly Bearish

Mildly Bullish

Dow Theory

Mildly Bullish

Mildly Bearish

OBV

Mildly Bearish

No Trend

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

0What is working for the Company

NO KEY POSITIVE TRIGGERS

-21What is not working for the Company

NET PROFIT(HY)

At JPY 227,244 MM has Grown at -64.06%

OPERATING CASH FLOW(Y)

Lowest at JPY 459,074 MM

ROCE(HY)

Lowest at 5.06%

DEBT-EQUITY RATIO (HY)

Highest at 63.92 %

INTEREST COVERAGE RATIO(Q)

Lowest at 3,040.5

RAW MATERIAL COST(Y)

Grown by 9.89% (YoY

DEBTORS TURNOVER RATIO(HY)

Lowest at 5.66%

NET SALES(Q)

Lowest at JPY 5,340,268 MM

OPERATING PROFIT(Q)

Lowest at JPY 422,782 MM

OPERATING PROFIT MARGIN(Q)

Lowest at 7.92 %

Here's what is not working for Honda Motor Co., Ltd.

Net Profit

At JPY 227,244 MM has Grown at -64.06%

Year on Year (YoY)

MOJO Watch

Near term Net Profit trend is very negative

Net Profit (JPY MM)

Operating Cash Flow

Lowest at JPY 459,074 MM and Fallen

In each year in the last three years

MOJO Watch

The company's cash revenues from business operations are falling

Operating Cash Flows (JPY MM)

Interest Coverage Ratio

Lowest at 3,040.5

in the last five periods

MOJO Watch

The company's ability to manage interest payments is deteriorating

Operating Profit to Interest

Debt-Equity Ratio

Highest at 63.92 % and Grown

In each half year in the last five Semi-Annual periods

MOJO Watch

The company is borrowing more to fund its operations; it's liquidity situation may be stressed

Debt-Equity Ratio

Net Sales

Lowest at JPY 5,340,268 MM

in the last five periods

MOJO Watch

Near term sales trend is negative

Net Sales (JPY MM)

Operating Profit

Lowest at JPY 422,782 MM

in the last five periods

MOJO Watch

Near term Operating Profit trend is negative

Operating Profit (JPY MM)

Operating Profit Margin

Lowest at 7.92 %

in the last five periods

MOJO Watch

Company's profit margin has deteriorated

Operating Profit to Sales

Debtors Turnover Ratio

Lowest at 5.66%

in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling Debtors has slowed

Debtors Turnover Ratio

Raw Material Cost

Grown by 9.89% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has deteriorated; this may lead to a fall in profit margin

Raw Material Cost as a percentage of Sales