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Honda Motors (HMC)
NYSE:HMC
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Honda Motor Company
(NYSE:HMC)
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Rating:59Neutral
Price Target:
$32.00
▲(3.59% Upside)
Action:ReiteratedDate:03/02/26
The score is held back primarily by weakened cash-flow trends and soft technical momentum (price below key moving averages with negative MACD). These are partly offset by an attractive valuation (moderate P/E and high dividend yield) and an earnings-call backdrop that maintains guidance and emphasizes liquidity and motorcycle strength, despite significant auto/EV and tariff-related headwinds.
Positive Factors
Leading, profitable motorcycle franchise
Honda's motorcycle business is a durable cash generator: record-level unit targets and an 8.9% YoY operating profit increase show strong, diversified demand (India, Pakistan, Brazil). High volumes, stable margins and broad geographic exposure provide steady earnings and offset auto-cycle volatility.
Robust liquidity and strong operating cash flow
Material net cash and sizeable operating cash generation provide a multi-quarter buffer to fund R&D, absorb one-off EV charges, support dividends and maintain operations during cyclical downtimes. This balance-sheet liquidity underpins strategic flexibility and reduces near-term refinancing risk.
Shareholder‑friendly capital action (treasury cancellation)
Cancellation of a large block of treasury stock signals disciplined capital allocation and enhances per-share metrics over time. As a structural policy choice, it shows management prioritizes shareholder returns alongside maintaining dividends, reinforcing long-term investor alignment.
Negative Factors
Automobile segment operating loss and demand weakness
The auto division's operating loss reflects structural pressures: supply disruptions and soft demand in key markets compress margins and depress consolidated profitability. Given autos' scale, persistent weakness would need product, pricing or cost restructuring to restore group earnings power over the medium term.
Large EV‑related charges and strategy uncertainty
Substantial multi-hundred‑billion yen write‑downs and R&D for BEVs create multi-period earnings drag and raise execution risk. Revisiting EV plans amid competitive, regional software gaps suggests possible delays or repricing, increasing uncertainty over returns on heavy near-term capital allocation.
Weakened free cash flow and variable leverage
FCF deterioration from prior strong levels reduces Honda's headroom for capex, sustained R&D and shareholder payouts. Combined with inconsistent leverage trends, this limits financial flexibility to absorb shocks or pursue opportunistic investments without tightening liquidity or raising funding costs.
Honda Motor Company (HMC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$32.96B
Dividend Yield4.19%
Average Volume (3M)999.21K
Price to Earnings (P/E)12.2
Beta (1Y)0.64
Revenue Growth0.32%
EPS Growth-25.51%
CountryUS
Employees194,993
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Manufacturers
Share Statistics
EPS (TTM)0.77
Shares Outstanding1,511,000,000
10 Day Avg. Volume700,858
30 Day Avg. Volume999,211
Financial Highlights & Ratios
PEG Ratio-0.36
Price to Book (P/B)0.51
Price to Sales (P/S)0.29
P/FCF Ratio-11.41
Enterprise Value/Market Cap430.57
Enterprise Value/Revenue0.66
Enterprise Value/Gross Profit3.23
Enterprise Value/Ebitda8.47
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)2.3
Revenue Forecast (FY)$136.88B
Honda Motor Company Business Overview & Revenue Model
Company DescriptionHonda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. It operates through four segments: Motorcycle Business, Automobile Business, Financial Services Business, and Life Creation and Other Businesses. The Motorcycle Business segment produces motorcycles, including sports, business, and commuter models; and various off-road vehicles, such as all-terrain vehicles and side-by-sides. The Automobile Business segment offers passenger cars, light trucks, and mini vehicles. The Financial Services Business segment provides various financial services, including retail lending and leasing services to customers, as well as wholesale financing services to dealers. The Life Creation and Other Businesses segment manufactures and sells power products, such as general purpose engines, generators, water pumps, lawn mowers, riding mowers, robotic mowers, brush cutters, tillers, snow blowers, outboard marine engines, walking assist devices, and portable battery inverter power sources. This segment also offers HondaJet aircraft. The company also sells spare parts; and provides after-sale services through retail dealers directly, as well as through independent distributors and licensees. Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyHonda generates revenue through several key streams. The primary source of income is the sale of automobiles and motorcycles, which includes a wide range of models from economy cars to luxury vehicles and high-performance motorcycles. Additionally, Honda earns revenue from the production and sale of power equipment, such as lawnmowers and generators. The company also engages in financial services, providing financing solutions to customers and dealerships, thus generating interest income. Significant partnerships, such as collaborations with technology firms in electric vehicle development and autonomous driving, contribute to Honda's innovation and market competitiveness. Furthermore, Honda's focus on sustainability and investment in alternative energy solutions, like hydrogen fuel cells, are expected to enhance its earnings in the future.
Honda Motor Company Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows revenue contributions from each business area, indicating which segments are growing, stable, or declining, and providing insight into the company's strategic focus and market positioning.
Shows revenue contributions from each business area, indicating which segments are growing, stable, or declining, and providing insight into the company's strategic focus and market positioning.
Data provided by:
The Fly
The FlyHonda Motor Company Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Neutral
Balanced: the company shows strong cash generation, resilient motorcycle operations (record-targeted volumes), maintained guidance and shareholder actions, but faces significant near-term headwinds from large one-time EV charges, tariff-related profit losses, automobile segment weakness and emerging material supply risks. Management is taking steps to revisit EV strategy and control costs, but uncertainty remains.Q3-2026 Updates
Positive Updates
Strong Motorcycle Performance and Record Sales Target
Motorcycle unit sales through Q3 were 16.44 million (growth led by India, Pakistan and Brazil) and management reiterated a full-year motorcycle target of 21.3 million units — the highest on record. Motorcycle operating profit rose JPY 44.8 billion YoY to JPY 546.5 billion (≈+8.9% YoY).
Solid Cash Generation and Liquidity
Operating cash flow after R&D adjustment was JPY 1.8558 trillion; free cash flow excluding financial services was JPY 917.4 billion; and net cash at the end of Q3 was JPY 3.1707 trillion, supporting near-term investment and shareholder returns.
Maintained Full-Year Guidance and Dividend
Company maintained FY ending March 2026 forecasts: operating profit JPY 550 billion and profit attributable to owners JPY 300 billion. Full-year dividend guidance was unchanged at JPY 70 per share.
Tariff Impact Reduced Versus Initial Expectation
Tariff headwind initially forecast at JPY 450 billion at the start of the year has been reassessed and reduced to an incorporated impact of approximately JPY 310 billion (a reduction of about JPY 140 billion, ~31% lower than the initial estimate).
Operating Profit Excluding One-offs Would Be Strong
Management indicated that excluding one-time EV-related expenses and tariffs, consolidated operating profit would have been ~JPY 1.1485 trillion for the period, implying core business profitability absent those nonrecurring items.
Improved Semiconductor Supply Outlook
Semiconductor shortage recurrence risk is `good prospects for prevention` according to management; earlier disruption impacted production by roughly 110k units and was modeled as a JPY ~150 billion impact, but supply is recovering.
Shareholder Return Action — Treasury Share Cancellation
Board resolved cancellation of 747 million treasury shares, a capital action supportive of shareholder returns alongside the maintained dividend.
Negative Updates
Large YoY Decline in Reported Operating Profit
Consolidated operating profit for the third quarter was JPY 591.5 billion, down JPY 548.4 billion YoY (approximately a 48.1% decline versus the prior-year period).
Automobile Segment Weakness and Operating Loss
Automobile operating profit swung down by JPY 569 billion YoY to an operating loss of JPY 166.4 billion for the period; sales declined due to semiconductor disruption and weaker demand in parts of Asia (notably China).
Large One-Time EV-Related Charges and Uncertainty
Onetime EV-related expenses (write-offs and reviews) totaled ~JPY 270 billion in the 9 months; management expects full-year EV-related charges including R&D to be roughly JPY 690–700 billion (e.g., ~JPY 290 billion of writedowns + JPY 400 billion R&D), with remaining uncertainty tied to negotiations (e.g., GM) and potential further adjustments.
Tariffs and Trade-Related Profit Pressure
Tariff impact materially squeezed profit (final incorporated impact ~JPY 310 billion), with continued cost and market-share pressure in affected regions; management notes that tariff-related losses will not be recovered immediately next fiscal year.
Decline in Reported Net Profit Versus Prior Year
Quarter profit attributable to owners was JPY 465.4 billion, down JPY 339.8 billion YoY (≈42.2% decline), reflecting the combined effect of EV charges, tariffs and foreign exchange impacts.
Emerging Supply-Chain Risks Beyond Semiconductors
Management flagged nascent supply risks for other key materials including rare earth metals and memory components; rare-earth export controls/slow approvals from China create medium-term supply uncertainty and may require inventory or redesign measures.
Competitive and Market Challenges for EVs, Especially in China and North America
Management acknowledged weakened BEV demand in North America and strong low-cost local competition and software/UX gaps in China; they said Honda is revisiting EV model launches, product lineup and strategy and may delay/scale back or reprice EV plans.
R&D and Expense Headwinds
R&D and expense impacts were negative: R&D was a drag (e.g., JPY 35.7 billion negative on the quarter and JPY 166 billion negative on the full-year bridge) while expenses contributed a JPY ~108.6 billion drag year-to-date, pressuring near-term margins.
Company Guidance
Honda maintained its FY Mar‑2026 guidance of consolidated operating profit JPY 550 billion and profit attributable to owners JPY 300 billion, kept the full‑year dividend at JPY 70/share and approved cancellation of 747 million treasury shares, while assuming USD/JPY ≈ ¥148 and unchanged unit‑sale targets of motorcycles 21.3m, automobiles 3.34m and power products 3.67m; Q3/YTD results showed operating profit JPY 591.5bn (down JPY 548.4bn YoY), profit attributable JPY 465.4bn (down JPY 339.8bn), equity‑method income JPY 24.0bn (+JPY 51.3bn), 9‑month unit sales motorcycles 16.44m, autos 2.561m, power products 2.507m, net cash JPY 3.1707trn, free cash flow ex‑financial services JPY 917.4bn and operating cash flow after R&D JPY 1.8558trn; management said tariff headwinds were revised down from ~JPY 450bn to ~JPY 310bn, one‑time EV‑related charges YTD ~JPY 270–290bn (total BEV‑related budgeted charges ~JPY 650–700bn including R&D), and that excluding one‑offs and tariffs operating profit would be ~JPY 1.1485trn, while FY operating‑profit swing assumptions include sales −JPY 162bn, price/cost +JPY 230bn, expenses −JPY 106.5bn, R&D −JPY 166bn and FX −JPY 149bn.Honda Motor Company Financial Statement Overview
Summary
Income statement trends are mixed: multi-year revenue growth but a sharp TTM slowdown and thin net margins. The balance sheet is supported by sizable equity but leverage variability adds risk. Cash flow is the biggest drag, with free cash flow deteriorating to near breakeven in TTM after being strong in 2022–2024, reducing flexibility in a cyclical industry.Income Statement
Revenue expanded strongly from 2022–2025 annual periods, but the latest TTM (Trailing-Twelve-Months) shows a sharp revenue decline versus the prior annual base, signaling near-term volatility. Profitability is positive but modest for the sector: recent gross margin sits around ~21%, while net margin is thin (~3% in TTM vs ~4–5% in recent annual years). Earnings power also appears to have softened versus 2024, with lower net income and lower operating profitability in TTM, which tempers the otherwise solid multi-year growth story.63
Positive
Balance Sheet
The company carries substantial leverage in absolute terms, and leverage has been inconsistent year-to-year (debt rising and falling meaningfully across periods), which adds balance-sheet risk. That said, equity is sizable and has been relatively stable, supporting the capital structure. Returns on equity are positive but not standout (mid-single-digit in TTM and high-single-digit in the better recent annual years), suggesting decent but not exceptional balance-sheet productivity.58
Neutral
Cash Flow
Cash generation has weakened materially: free cash flow is near breakeven in TTM and deeply negative in the latest annual period, a notable deterioration from the strong positive free cash flow seen in 2022–2024. Operating cash flow is positive, but it is low relative to the company’s debt burden in recent periods, reducing financial flexibility. Overall, the cash flow profile looks volatile, with a clear step-down from the strong 2022–2023 cash performance.35
Negative
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 21.43T | 21.69T | 20.43T | 16.91T | 14.55T | 13.17T |
| Gross Profit | 4.39T | 4.66T | 4.41T | 3.33T | 2.98T | 2.73T |
| EBITDA | 1.68T | 2.12T | 2.50T | 1.64T | 2.36T | 2.08T |
| Net Income | 498.78B | 835.84B | 1.11T | 651.42B | 707.07B | 657.42B |
Balance Sheet | ||||||
| Total Assets | 32.85T | 30.78T | 29.77T | 24.67T | 23.97T | 21.92T |
| Cash, Cash Equivalents and Short-Term Investments | 5.03T | 4.74T | 5.18T | 4.07T | 3.89T | 3.05T |
| Total Debt | 13.55T | 4.42T | 10.08T | 7.62T | 8.05T | 6.74T |
| Total Liabilities | 20.07T | 18.15T | 16.77T | 13.17T | 13.20T | 12.55T |
| Stockholders Equity | 12.47T | 12.33T | 12.70T | 11.18T | 10.47T | 9.08T |
Cash Flow | ||||||
| Free Cash Flow | 11.83B | -555.28B | 138.61B | 1.50T | 1.23T | 521.24B |
| Operating Cash Flow | 816.57B | 292.15B | 747.28B | 2.13T | 1.68T | 1.07T |
| Investing Cash Flow | -840.87B | -941.97B | -867.27B | -678.06B | -376.06B | -796.88B |
| Financing Cash Flow | -145.77B | 280.48B | 918.65B | -1.47T | -615.72B | -283.98B |
Honda Motor Company Technical Analysis
Negative
30.89
Price Trends
30.48
Negative
30.43
Negative
30.68
Negative
Market Momentum
-0.23
Positive
38.32
Neutral
21.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMC, the sentiment is Negative. The current price of 30.89 is below the 20-day moving average (MA) of 30.91, above the 50-day MA of 30.48, and above the 200-day MA of 30.68, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 38.32 is Neutral, neither overbought nor oversold. The STOCH value of 21.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HMC.
Honda Motor Company Risk Analysis
Honda Motor Company disclosed 22 risk factors in its most recent earnings report. Honda Motor Company reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
3. Laws and Regulations Concerning Human Rights Q1, 2023
2.
1. Economic Security Q1, 2023
3.
Geopolitical Risk Q1, 2023
Honda Motor Company Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $326.82B | 12.81 | 10.34% | 2.57% | 7.28% | 12.41% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $1.51T | 374.83 | 4.89% | ― | -2.93% | -47.22% | |
59 Neutral | $32.96B | 12.17 | 4.11% | 4.19% | 0.32% | -25.51% | |
57 Neutral | $70.29B | 24.08 | 4.34% | 0.69% | -1.29% | -49.96% | |
56 Neutral | $53.42B | -6.99 | -20.26% | 5.64% | 3.75% | 33.37% | |
55 Neutral | $17.75B | 29.41 | 6.53% | ― | -9.99% | -54.75% |
* Consumer Cyclical Sector Average
HMC
Honda Motor Company
29.29
3.05
11.64%
F
Ford Motor
13.39
4.72
54.37%
GM
General Motors
77.76
33.00
73.74%
TSLA
Tesla
403.32
131.28
48.26%
TM
Toyota Motor
243.66
63.00
34.87%
LI
Li Auto
17.57
-10.10
-36.50%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.