Is Honda Motor Company Stock (HMC) a Good Investment? (2024)

As of March 15, 2024, Honda Motor Co Ltd (ADR) had a $62.6 billion market capitalization, putting it in the 97th percentile of companies in the Auto & Truck Manufacturers industry.

Currently, Honda Motor Co Ltd (ADR)’s price-earnings ratio is 9.4. Honda Motor Co Ltd (ADR)’s trailing 12-month revenue is $130.7 billion with a 4.8% profit margin. Year-over-year quarterly sales growth most recently was 21.4%. There are not analysts providing consensus earnings estimates for the current fiscal year. Honda Motor Co Ltd (ADR) currently has a 2.8% dividend yield.

Before you choose to buy, sell or hold Honda Motor Co Ltd (ADR) stock, you’ll want to analyze how it has been graded. Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, making sense of financial ratios, reading income statements and analyzing recent stock movement. To help individual investors decide whether or not to buy (HMC) stock, AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way that is suitable for investors of all knowledge levels.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for each of five key investing factors: value, growth, momentum, earnings revisions and quality. Here, we’ll take a closer look at Honda Motor Co Ltd (ADR)’s stock grades for value, growth and quality. Learn more about A+ Investor here!

As of March 15, 2024, Honda Motor Co Ltd (ADR) had a $62.6 billion market capitalization, putting it in the 97th percentile of companies in the Auto & Truck Manufacturers industry.

Currently, Honda Motor Co Ltd (ADR)’s price-earnings ratio is 9.4. Honda Motor Co Ltd (ADR)’s trailing 12-month revenue is $130.7 billion with a 4.8% profit margin. Year-over-year quarterly sales growth most recently was 21.4%. There are not analysts providing consensus earnings estimates for the current fiscal year. Honda Motor Co Ltd (ADR) currently has a 2.8% dividend yield.

Before you choose to buy, sell or hold Honda Motor Co Ltd (ADR) stock, you’ll want to analyze how it has been graded. Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, making sense of financial ratios, reading income statements and analyzing recent stock movement. To help individual investors decide whether or not to buy (HMC) stock, AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way that is suitable for investors of all knowledge levels.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for each of five key investing factors: value, growth, momentum, earnings revisions and quality. Here, we’ll take a closer look at Honda Motor Co Ltd (ADR)’s stock grades for value, growth and quality. Learn more about A+ Investor here!

Growth Grade:

The foundation of growth investing is seeking out stocks of companies exhibiting strong, consistent and prolonged growth that is expected to continue into the future.

In order to compute the Growth Score and assign it a letter grade, the percentile ranks for each of the three individual components‐consistency of annual sales growth, five‐year sales growth rankings adjusted for extreme levels, and consistency of positive annual cash from operations‐must be determined. These three rank figures are added together, and the sum is ranked against the entire stock universe to arrive at a company’s Growth Score to create an equal distribution of grades.

The companies in the bottom 20% of the stock universe receive Growth Grades of F, considered Very Weak, while those in the top 20% receive A grades, which are considered Very Strong.

Honda Motor Co Ltd (ADR) has a Growth Score of 62, which is Strong.

Quality Grade:

Like the Value Grade, AAII’s A+ Investor Quality Grade comes from the percentile rank of key metrics. Specifically, the Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit relative to assets, buyback yield, change in total liabilities to assets, accruals, Z double prime bankruptcy risk (Z) score and F-Score.

The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the remaining measures that are valid. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The Quality Score is used to assess the underlying “quality� of a particular stock. A higher quality stock possesses traits associated with upside potential and reduced downside risk. Backtesting of the Quality Grade shows that stocks with higher grades, on average, outperformed stocks with lower grades over the period of 1998 through 2019.

Stocks receive better grades (higher scores) for having higher scores for the quality subcomponents and worse grades (lower scores) for lower scores for the subcomponents.

Honda Motor Co Ltd (ADR) has a Quality Score of 56, which is Average.

Estimate Revisions Grade:

The Earnings Estimate Revisions Score considers the magnitude of a company’s earnings surprise in its last two reported fiscal quarters. Often, positive surprises beget further positive surprises‐or at least continued sales growth (the exact opposite is generally true, too).

Estimate revisions offer an indication of what analysts are thinking about the short-term prospects of a firm. The Earnings Estimate Revisions Score is based on the statistical significance of a firm’s last two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months.

Honda Motor Co Ltd (ADR) does not have enough analyst coverage to have a meaningful Earnings Estimate Score.

In addition to Growth, Estimate Revisions and Quality, A+ Investor also provides grades for Value and Momentum.

The Momentum Grade helps uncover stocks experiencing anomalously high rates of return; research finds that stocks with high relative levels of momentum tend to outperform, whereas those with low levels of momentum tend to continue underperforming.

Successful stock investing involves buying low and selling high, so stock valuation is an important consideration for stock selection. Buying stocks that are going to go up typically means buying stocks that are undervalued in the first place, although momentum investors may argue that point.

These 2 key factors, when combined with the above, provide a holistic view into a stock. Further, by joining A+ Investor you can see whether Honda Motor Co Ltd (ADR)’s stock passes any of our 60+ stock screens that have outperformed the market since their creation.

Overall, Honda Motor Co Ltd (ADR) stock has a Growth Grade of B, Quality Grade of C, Earnings Estimate Revisions Grade of NA.

Whether or not you should buy Honda Motor Co Ltd (ADR) stock will ultimately depend on your individual goals, risk tolerance and allocation. AAII can help you figure these out and identify which investments align with what works best for you.

Lastly, it’s important to evaluate a stock by comparing it against others in the same industry. Review the table below to see how Honda Motor Co Ltd (ADR) stock stands up against its competitors. Click into any of the below tickers to see their stock grades for value, momentum, quality and EPS revisions.

You can use the information about how Honda Motor Co Ltd (ADR) is graded to determine if you should invest in this stock. However, you should decide whether Honda Motor Co Ltd (ADR)’s stock is a buy, sell or hold based on a combination of grades, metrics, ratios and U.S. Securities and Exchange Commission (SEC) reports.

Investors are encouraged to do their own due diligence and research. In this way, individuals can effectively become managers of their own assets—without having to rely on others for financial independence. You can count on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis.

So, if you’re still on the fence about whether Honda Motor Co Ltd (ADR) is a buy, sell or hold, you can utilize AAII’s expansive and robust screening tools like A+ Investor to help with your decision.

A+ Investor adds to its qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions, find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.