Honda Motor Company (HMC, Financial) hit a 50-day high price Tuesday, and yet, it’s still trading at less than its book value. The Japanese auto manufacturer seems to qualify as a Benjamin Graham-style value stock with its price-earnings ratio of just 7.80 and a whopping 37% discount from book value.
Listed on the NYSE as well as the Tokyo Stock Exchange (under the ticker TSE:7267) and several others, the carmaker remains one of the most well-known brand names in the world. Honda’s market capitalization is $54.77 billion with an enterprise value of $92.26 billion. Earnings per share are up this year by 46.40%, and the past five-year EPS gain is 14.80%.
The price-sales ratio of 0.48 is low, indicating possible value. The price-to-free-cash-flow ratio comes in at 10.21. Honda’s shareholder equity exceeds its long-term debt, and the current ratio of 1.40 is positive.
A $1.40 per share quarterly dividend is being paid for the NYSE listing, resulting in an annualized yield of 4.41%.
Honda’s stock trades with an average daily volume of about 1.06 million shares.
A summary of its financials by GuruFocus shows two good signs, three medium warning signs and three severe warning signs:
Honda Motor Company faces a fierce group of competitors, including Toyota (TOYOF, Financial), Nissan (NSANF, Financial), Suzuki (TSE:6785, Financial) and Subaru (FUJHF, Financial) just in its home country, not to mention foreign competitors like Tesla (TSLA, Financial) and Ford (F, Financial).
This daily stock chart shows how Honda is breaking upward to new 2022 highs:
Note that its now trading above both its 50-day moving average (the grey line) and its 200-day moving average (the green line). You can see that the 50-day moving average is now trending upward again. Nothing guarantees continued bullish movement, but it’s good to be moving in the right direction.
Here’s what looks good about Honda right now: they’re making money and the stock is cheap by several relative valuation measures. While investors are waiting for the market to recognize this value, a decent dividend shows up every few months. How much the global macroeconomic environment helps or hurts is the big unknown here. It's also notable that the stock hasn't risen nearly as sharply on news of its electric vehicle plans compared to other auto manufacturers, as its EVs so far have been disappointing.
