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Should Value Investors Buy Honda Motor Co. (HMC) Stock?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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 company value investors might notice is Honda Motor Co. (HMC - Free Report) . HMC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 7.63, while its industry has an average P/E of 8.01. Over the past year, HMC's Forward P/E has been as high as 8.60 and as low as 6.05, with a median of 7.22.
HMC is also sporting a PEG ratio of 0.47. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HMC's industry currently sports an average PEG of 0.67. Over the past 52 weeks, HMC's PEG has been as high as 1.59 and as low as 0.44, with a median of 0.62.
Investors should also recognize that HMC has a P/B ratio of 0.61. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. HMC's current P/B looks attractive when compared to its industry's average P/B of 1.79. Over the past 12 months, HMC's P/B has been as high as 0.65 and as low as 0.43, with a median of 0.51.
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 0.42. This compares to its industry's average P/S of 0.66.
Finally, our model also underscores that HMC has a P/CF ratio of 4.86. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. HMC's P/CF compares to its industry's average P/CF of 6.55. Within the past 12 months, HMC's P/CF has been as high as 5.16 and as low as 3.37, with a median of 3.96.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Honda Motor Co. 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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Should Value Investors Buy Honda Motor Co. (HMC) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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 company value investors might notice is Honda Motor Co. (HMC - Free Report) . HMC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 7.63, while its industry has an average P/E of 8.01. Over the past year, HMC's Forward P/E has been as high as 8.60 and as low as 6.05, with a median of 7.22.
HMC is also sporting a PEG ratio of 0.47. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HMC's industry currently sports an average PEG of 0.67. Over the past 52 weeks, HMC's PEG has been as high as 1.59 and as low as 0.44, with a median of 0.62.
Investors should also recognize that HMC has a P/B ratio of 0.61. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. HMC's current P/B looks attractive when compared to its industry's average P/B of 1.79. Over the past 12 months, HMC's P/B has been as high as 0.65 and as low as 0.43, with a median of 0.51.
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 0.42. This compares to its industry's average P/S of 0.66.
Finally, our model also underscores that HMC has a P/CF ratio of 4.86. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. HMC's P/CF compares to its industry's average P/CF of 6.55. Within the past 12 months, HMC's P/CF has been as high as 5.16 and as low as 3.37, with a median of 3.96.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Honda Motor Co. 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.