Honda Motor Co Ltd (NYSE:HMC) has been attracting attention from investors with its daily loss of -2.96%, a 3-month gain of 11.69%, and an Earnings Per Share (EPS) of 3.71. The question that arises is whether the stock is modestly overvalued or not. In this article, we will delve into the valuation analysis of Honda Motor Co, providing you with a comprehensive understanding of its current market standing.
Established in 1948, Honda Motor Co Ltd (NYSE:HMC) began as a motorcycle manufacturer and has since diversified its portfolio to include automobiles, motorcycles, and power products like boat engines, generators, and lawnmowers. It has also ventured into robotics and private jets. In fiscal 2023, Honda sold 22.4 million cars and motorcycles, generating consolidated sales of JPY 16.9 trillion.
According to GuruFocus, the stock price of Honda Motor Co is $33.81, while the GF Value is $28.72. This suggests that the stock is modestly overvalued.
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. If the stock price is significantly above the GF Value Line, it is considered overvalued. Conversely, if it is significantly below the GF Value Line, its future return is likely to be higher.
Furthermore, it is essential to review a company’s financial strength before deciding to invest. Honda Motor Co has a cash-to-debt ratio of 0.51, which ranks worse than 53.17% of companies in the Vehicles & Parts industry. However, its financial strength is considered fair, with a ranking of 6 out of 10.
Honda Motor Co has been profitable for the past 10 years, with an operating margin of 5.38%. Its profitability ranking is 6 out of 10, indicating fair profitability. However, its growth ranks worse than 51.08% of companies in the industry.
When comparing Honda Motor Co’s return on invested capital (ROIC) to its weighted average cost of capital (WACC), the company appears to be creating value for its shareholders.
In conclusion, Honda Motor Co (NYSE:HMC) appears to be modestly overvalued. The company’s financial condition and profitability are fair, but its growth is below average compared to its industry peers.
Sources:
– GuruFocus (No URL provided)
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2023-09-29 16:03:40
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