Is Honda Motor (HMC) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Honda Motor (HMC). HMC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.30. This compares to its industry's average Forward P/E of 11.16. Over the past year, HMC's Forward P/E has been as high as 13.93 and as low as 6.99, with a median of 8.56.
HMC is also sporting a PEG ratio of 0.51. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HMC's industry currently sports an average PEG of 0.64. Within the past year, HMC's PEG has been as high as 0.78 and as low as 0.35, with a median of 0.50.
Another notable valuation metric for HMC is its P/B ratio of 0.61. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.18. Over the past 12 months, HMC's P/B has been as high as 0.67 and as low as 0.52, with a median of 0.60.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HMC has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.55.
Finally, our model also underscores that HMC has a P/CF ratio of 3.59. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.68. Within the past 12 months, HMC's P/CF has been as high as 6.16 and as low as 3.43, with a median of 4.87.
These are just a handful of the figures considered in Honda Motor's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that HMC is an impressive value stock right now.
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Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report
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