Is Honda Motor (HMC) a Great Value Stock 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...
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Honda Motor (HMC). HMC is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 7.19. This compares to its industry's average Forward P/E of 10.91. Over the past 52 weeks, HMC's Forward P/E has been as high as 12.71 and as low as 6.99, with a median of 8.46.
Investors should also note that HMC holds a PEG ratio of 0.50. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HMC's PEG compares to its industry's average PEG of 0.57. 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.
We should also highlight that HMC has a P/B ratio of 0.60. 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 solid versus its industry's average P/B of 1.16. Over the past year, HMC's P/B has been as high as 0.67 and as low as 0.52, with a median of 0.61.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HMC has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.53.
Finally, investors should note that HMC has a P/CF ratio of 3.56. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. HMC's P/CF compares to its industry's average P/CF of 6.54. HMC's P/CF has been as high as 6.16 and as low as 3.43, with a median of 4.76, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Honda Motor is likely undervalued currently. And when considering the strength of its earnings outlook, HMC sticks out at as one of the market's strongest value stocks.
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Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report
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