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Are Investors Undervaluing Honda Motor (HMC) Right Now?

Zacks

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

Honda Motor (HMC) is a stock many investors are watching right now. HMC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.35, while its industry has an average P/E of 7.68. HMC’s Forward P/E has been as high as 10.71 and as low as 6.35, with a median of 8.48, all within the past year.


Investors should also recognize that HMC has a P/B ratio of 0.65. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 0.91. HMC’s P/B has been as high as 0.88 and as low as 0.59, with a median of 0.72, over the past year.

Finally, our model also underscores that HMC has a P/CF ratio of 2.94. 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. This stock’s P/CF looks attractive against its industry’s average P/CF of 2.97. Over the past year, HMC’s P/CF has been as high as 4.16 and as low as 2.69, with a median of 3.30.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Honda Motor is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HMC feels like a great value stock at the moment.


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