It hasn't been a great afternoon session for Honda Motor Company investors, who have watched their shares sink by -2.2% to a price of $31.3. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Honda Motor Company Is Reasonably Priced:
Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33. In contrast, Honda Motor Company has a trailing 12 month P/E ratio of 10.6 based on its earnings per share of $2.94.
Honda Motor Company has moved 31.4% over the last year compared to 20.4% for the S&P 500 -- a difference of 11.0%. Honda Motor Company has a 52 week high of $32.62 and a 52 week low of $21.44.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2020-03-31 | 2021-03-31 | 2022-03-31 | 2023-03-31 | |
|---|---|---|---|---|
| Revenue (MM) | $14,931,009 | $13,170,519 | $14,552,696 | $16,907,725 |
| Gross Margins | 20.6% | 20.7% | 20.5% | 19.7% |
| Operating Margins | 4.2% | 5.0% | 6.0% | 5.0% |
| Net Margins | 3.05% | 4.99% | 4.86% | 4.11% |
| Net Income (MM) | $455,746 | $657,425 | $707,067 | $695,267 |
| Net Interest Expense (MM) | -7,922 | -18,889 | -3,554 | -18,649 |
| Net Interest Expense (MM) | -$7,922 | -$18,889 | -$3,554 | -$18,649 |
| Depreciation & Amort. (MM) | -$699,877 | -$624,239 | -$611,063 | -$721,630 |
| Earnings Per Share | $260.13 | $380.75 | $411.09 | $2.94 |
| EPS Growth | n/a | 46.37% | 7.97% | -99.28% |
| Diluted Shares (MM) | 1,752 | 1,727 | 1,720 | 1,664 |
| Free Cash Flow (MM) | $378,157 | $521,242 | $1,230,396 | $1,496,534 |
| Capital Expenditures (MM) | -$601,258 | -$551,137 | -$449,226 | -$632,488 |
| Net Current Assets (MM) | -$4,874,432 | -$4,969,100 | -$4,359,182 | -$3,545,577 |
| Current Ratio | 1.26 | 1.33 | 1.47 | 1.45 |
| Long Term Debt (MM) | $4,221,229 | $4,715,361 | $4,984,252 | $4,373,973 |
| Net Debt / EBITDA | 3.32 | 3.27 | 2.71 | 2.4 |
Honda Motor Company has growing revenues and a flat capital expenditure trend and a pattern of improving cash flows. Additionally, the company's financial statements display wider gross margins than its peer group and healthy leverage. However, the firm has declining EPS growth. Finally, we note that Honda Motor Company has weak operating margings with a stable trend and just enough current assets to cover current liabilities.
