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Why Is Honda Motor (HMC) Up 3.1% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Honda Motor Company, Ltd. (HMC - Free Report) . Shares have added about 3.1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Honda Beats on Q3 Earnings, Misses Revenue Estimates
Honda Motor reported consolidated income of ¥168.8 billion ($1.55 billion) or ¥93.67 per share ($0.86 per ADR) in the third quarter (ended Dec 31, 2016) of fiscal 2017. Earnings per share surpassed the Zacks Consensus Estimate of $0.49. Consolidated income increased 35.9% from the year-ago quarter, while the earnings per share were up 24.76%.
Consolidated net sales and other operating revenues declined 3.2% year over year to ¥3.50 trillion ($32.11 billion). The figure also missed the Zacks Consensus Estimate of $33.01 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset higher revenues in financial services, automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥207.6 billion ($1.9 billion), up 27.4% from the prior-year quarter. The improvement was backed by cost-reduction efforts and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects.
Segment Performance
Revenues in the Automobile segment fell 3.3% to ¥2.60 trillion ($23.85 billion) owing to unfavorable foreign currency translation effects. Unit sales increased 5.2% from the year-ago period to 925,000 vehicles. Meanwhile, operating profit amounted to ¥129.8 billion ($1.19 billion), up 86.6% year over year, on cost-reduction efforts and lower SG&A expenses.
Revenues in the Motorcycle segment decreased 4.9% to ¥420.6 billion ($3.86 billion) due to unfavorable foreign currency translation effects, which offset the 0.8% increase in consolidated unit sales to 2.67 million motorcycles. Operating income fell 15.4% to ¥41.8 billion ($383.49 million) owing to unfavorable foreign currency translation effects, which offset the benefits of cost-reduction efforts.
Revenues in the Financial Services segment improved 1.8% to ¥455.7 billion ($4.18 billion). However, operating income declined 17.7% to ¥42.3 billion ($388.07 million) on higher SG&A expenses and unfavorable foreign currency translation effects.
Revenues in the Power Product and Other segment fell 2.1% to ¥80.3 billion ($736.70 million) in the reported quarter. The decline resulted from unfavorable foreign currency translation effects and lower consolidated unit sales. Unit sales in the segment dropped 0.2% to 1.18 million. The segment's operating loss was ¥6.3 billion ($57.80 million), wider than the loss of ¥7.4 billion ($60.66 million) in the year-ago quarter due to lower SG&A expenses in other businesses operations.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.80 trillion ($16.51 billion) as of Dec 31, 2016, up from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In the first nine months of fiscal 2017, cash flow from operations declined 52.2% to ¥458.28 billion ($4.20 billion).
Guidance
For fiscal 2017, Honda expects revenues to decline 5.5% to ¥13.8 trillion ($128.97 billion), higher than the previous guidance of ¥13.4 trillion ($130.1 billion). Operating income is likely to grow 55.9% to ¥785 billion ($7.34 billion), up from the previous estimate of ¥650 billion ($6.31 billion). Net income is projected to improve 58.2% to ¥545 billion ($5.09 billion) or ¥302.39 ($2.83) per share, up from the previous expectation of to ¥415 billion ($4.03 billion) or ¥230.26 ($2.24) per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted 37.14% downward due to these changes.
At this time, Honda Motor's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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Why Is Honda Motor (HMC) Up 3.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Honda Motor Company, Ltd. (HMC - Free Report) . Shares have added about 3.1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Honda Beats on Q3 Earnings, Misses Revenue Estimates
Honda Motor reported consolidated income of ¥168.8 billion ($1.55 billion) or ¥93.67 per share ($0.86 per ADR) in the third quarter (ended Dec 31, 2016) of fiscal 2017. Earnings per share surpassed the Zacks Consensus Estimate of $0.49. Consolidated income increased 35.9% from the year-ago quarter, while the earnings per share were up 24.76%.
Consolidated net sales and other operating revenues declined 3.2% year over year to ¥3.50 trillion ($32.11 billion). The figure also missed the Zacks Consensus Estimate of $33.01 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset higher revenues in financial services, automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥207.6 billion ($1.9 billion), up 27.4% from the prior-year quarter. The improvement was backed by cost-reduction efforts and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects.
Segment Performance
Revenues in the Automobile segment fell 3.3% to ¥2.60 trillion ($23.85 billion) owing to unfavorable foreign currency translation effects. Unit sales increased 5.2% from the year-ago period to 925,000 vehicles. Meanwhile, operating profit amounted to ¥129.8 billion ($1.19 billion), up 86.6% year over year, on cost-reduction efforts and lower SG&A expenses.
Revenues in the Motorcycle segment decreased 4.9% to ¥420.6 billion ($3.86 billion) due to unfavorable foreign currency translation effects, which offset the 0.8% increase in consolidated unit sales to 2.67 million motorcycles. Operating income fell 15.4% to ¥41.8 billion ($383.49 million) owing to unfavorable foreign currency translation effects, which offset the benefits of cost-reduction efforts.
Revenues in the Financial Services segment improved 1.8% to ¥455.7 billion ($4.18 billion). However, operating income declined 17.7% to ¥42.3 billion ($388.07 million) on higher SG&A expenses and unfavorable foreign currency translation effects.
Revenues in the Power Product and Other segment fell 2.1% to ¥80.3 billion ($736.70 million) in the reported quarter. The decline resulted from unfavorable foreign currency translation effects and lower consolidated unit sales. Unit sales in the segment dropped 0.2% to 1.18 million. The segment's operating loss was ¥6.3 billion ($57.80 million), wider than the loss of ¥7.4 billion ($60.66 million) in the year-ago quarter due to lower SG&A expenses in other businesses operations.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.80 trillion ($16.51 billion) as of Dec 31, 2016, up from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In the first nine months of fiscal 2017, cash flow from operations declined 52.2% to ¥458.28 billion ($4.20 billion).
Guidance
For fiscal 2017, Honda expects revenues to decline 5.5% to ¥13.8 trillion ($128.97 billion), higher than the previous guidance of ¥13.4 trillion ($130.1 billion). Operating income is likely to grow 55.9% to ¥785 billion ($7.34 billion), up from the previous estimate of ¥650 billion ($6.31 billion). Net income is projected to improve 58.2% to ¥545 billion ($5.09 billion) or ¥302.39 ($2.83) per share, up from the previous expectation of to ¥415 billion ($4.03 billion) or ¥230.26 ($2.24) per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted 37.14% downward due to these changes.
Honda Motor Company, Ltd. Price and Consensus
Honda Motor Company, Ltd. Price and Consensus | Honda Motor Company, Ltd. Quote
VGM Scores
At this time, Honda Motor's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.