Honda Motor Company’s (HMC) (JP:7267) U.S. and Japan-listed shares edged higher on Thursday despite the auto giant reporting its first annual loss in almost seven decades since its public listing.
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EV Pivot Pushes Honda into Fiscal 2026 Loss
The Tokyo-based company’s operating loss came in at 414.3 billion yen ($2.6 billion) during its fiscal 2026 that ended on March 31, representing a massive 1.6 trillion yen ($10.3 billion) drop from the previous year’s operating profit. Honda attributed the losses to the devaluation of its electric vehicle business and the impact of tariffs.
In the year, the automaker’s sales revenue came in almost flat, with only earnings rising by 0.5% to roughly 21.8 trillion yen ($138 billion). The profit also impacted diluted earnings per share, which swung from a profit of 178.93 yen ($1.13) a year ago to a loss of 106.06 yen (roughly 68 cents).
“In the United States, the expansion of the EV market has slowed due to revisions to EV incentives and the easing of fossil fuel regulations, resulting in impacts such as a decrease in EV sales volume and an increase in sales incentives,” Honda explained in its report.
Honda Eyes Return to Profitability in Fiscal 2027
In March, the Japanese carmaker, which is the world’s largest motorcycle manufacturer, forecast a $2.5 trillion ($15.7 billion) hit to its EV business due to an asset value writedown of its Chinese assets and plans to halt production of certain EV models planned for the U.S. and North American markets. In its report, it said these led to cumulative losses of roughly 1.6 trillion yen ($10 billion), including in research and development expenses.
Looking ahead, Honda expects its sales revenue for fiscal 2027 to rise by 6% to about 23.2 trillion yen ($146.7 billion). The carmaker is also guiding for an operating profit of 500 billion yen (about $3.2 billion).
Is Honda a Good Stock to Buy Now?
TipRanks’ AI analysts, based on various AI models, all have a Neutral (Hold) rating on Honda’s shares. For instance, OpenAI-5.2 rates the stock 59 out of 100, with a price target of $25 that implies about 2% downside.
The analyst pointed to Honda’s weakened cash-flow trend, among other factors, for giving the rating.
