Honda Motor Co (7267) AI Stock Analysis

• Market Cap: $5.29T
• Dividend Yield: 4.41%
• Average Volume (3M): 14.47M
• Price to Earnings (P/E): 12.9
• Beta (1Y): 1.16
• Revenue Growth: -0.43%
• EPS Growth: -26.68%
• Country: JP
• Employees: 194,993
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Manufacturers
• EPS (TTM): 39.23
• Shares Outstanding: 4,533,000,000
• 10 Day Avg. Volume: 15,290,380
• 30 Day Avg. Volume: 14,470,826
• PEG Ratio: -0.36
• Price to Book (P/B): 0.51
• Price to Sales (P/S): 0.29
• P/FCF Ratio: -28.68
• Enterprise Value/Market Cap: 2.75
• Enterprise Value/Revenue: 0.68
• Enterprise Value/Gross Profit: 3.33
• Enterprise Value/Ebitda: 8.20
• 1Y Price Target: $1,632.33
• Price Target Upside: 3.02% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 116.19
• Revenue Forecast (FY): $21.18T

• Rating: 59 Neutral
• Price Target: ¥1,641.00 ▲(3.57% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is held back primarily by weaker near-term financial performance, especially poor cash conversion and volatile free cash flow, alongside softer TTM revenue and margin trends. Technical signals are neutral and do not provide strong support. Valuation is a relative positive, supported by a moderate P/E and an attractive dividend yield.

Positive Factors

Diversified business model

Honda's revenue mix spans automobiles, motorcycles, power products and financial services, providing multiple, offsetting cash flow streams. This diversification cushions cyclicality in any one market, supports aftermarket and finance margins, and preserves core earnings during sector transitions.

Strategic AI/SoC partnership

Co-developing an automotive-grade analog AI SoC positions Honda to integrate advanced on-board compute into future vehicles. This strengthens product differentiation in software-defined vehicles, lowers reliance on external suppliers for critical compute, and supports long-term safety, autonomy and electrification strategies.

Resilient U.S. retail demand

Consistent U.S. retail volume growth, driven by light trucks, SUVs and hybrids, signals durable brand demand and dealer throughput. Stable U.S. sales sustain wholesale flows, parts/aftermarket revenue and finance receivables, supporting medium-term revenue visibility and cash generation capacity.

Negative Factors

Deteriorating cash generation

TTM operating cashflow and free cashflow are weak and volatile versus profits, indicating earnings are not converting into cash. Poor cash conversion reduces spending flexibility for EV capex, R&D and dealer financing, and increases reliance on external funding under stress.

Margin compression

Declining EBIT and net margins reflect cost pressures, product mix shifts and pricing headwinds. Sustained margin compression lowers return on capital and ROE, limiting internal funding for strategic investments and weakening the firm’s ability to absorb commodity, tariff or competitive shocks.

EV market and tariff headwinds

Structural shifts in the EV market plus tariff impacts have materially eroded operating profit, forcing margin sacrifice or higher investment to remain competitive. Adjusting product mix and supply chains is costly and raises execution risk over the coming quarters and years.

Honda Motor Co Business Overview & Revenue Model

Company Description

Honda 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 Money

Honda generates revenue through multiple key streams, primarily from the sale of automobiles and motorcycles. The automotive segment, which includes both passenger cars and light trucks, represents the largest portion of its revenue, driven by popular models such as the Honda Civic and CR-V. The motorcycle segment also contributes significantly, known for its extensive range of motorbikes catering to various markets. Additionally, Honda earns income from power equipment sales, including generators and lawn mowers. The company has strategic partnerships and collaborations that enhance its product offerings and market reach, including joint ventures in emerging markets. Furthermore, Honda's investment in research and development, particularly in electric and hybrid vehicle technologies, positions it to capitalize on evolving consumer preferences and regulatory trends, contributing to long-term profitability.

Honda Motor Co Financial Statement Overview

Summary

Income statement is mixed (revenue expanded over 2022–2025 but TTM shows a sharp contraction and weaker net/EBIT margins). Balance sheet is broadly manageable with debt-to-equity ~1.0 (FY2025), though ROE has moderated. Cash flow is the key weakness: volatile/low free cash flow and poor cash conversion versus net income reduce financial flexibility.

Income Statement

Revenue expanded strongly from 2022–2025 annual reports, but TTM (Trailing-Twelve-Months) shows a sharp revenue contraction (growth rate -0.874), signaling a near-term demand/volume reset. Profitability remains positive but has softened versus the prior year: TTM net margin is ~3.0% and EBIT margin ~5.4% (down from ~5.4% net margin and ~8.3% EBIT margin in FY2024), indicating margin pressure. Gross margin has stayed relatively steady around ~20–22%, which is a stabilizer, but the step-down in operating and net profitability in TTM weighs on the score.

Balance Sheet

The capital structure looks broadly manageable with equity roughly matching debt in the latest annual period (debt-to-equity ~1.0 in FY2025), and equity has grown versus earlier years. Returns on equity are positive but have moderated (TTM ~5.3% vs ~8.7% in FY2024), suggesting weaker earnings power recently. One data quality flag: TTM debt-to-equity is shown as 0.0 despite sizable debt and equity, so leverage should be interpreted using the annual figures. Overall, balance sheet strength is solid for the industry, but improving returns and containing leverage are key watch items.

Cash Flow

Cash generation has deteriorated meaningfully. TTM operating cash flow is ~¥0.82T and free cash flow is modestly positive (~¥0.11T), but both are weak relative to profits: TTM operating cash flow is only ~7% of debt, and free cash flow is negative versus net income (free cash flow to net income is negative), implying earnings are not currently translating into cash. The latest annual report also showed negative free cash flow, and free cash flow growth is highly volatile/negative, pointing to working-capital swings and/or elevated investment requirements that reduce financial flexibility.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	21.34T	21.69T	20.43T	16.91T	14.55T	13.17T
Gross Profit	4.37T	4.66T	4.41T	3.33T	2.98T	2.73T
EBITDA	1.77T	2.12T	2.50T	1.64T	1.70T	1.55T
Net Income	496.01B	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	13.24T	11.77T	10.08T	7.62T	8.05T	8.04T
Total Liabilities	20.07T	18.15T	16.77T	13.12T	13.20T	12.55T
Stockholders Equity	12.47T	12.33T	12.70T	11.23T	10.47T	9.08T
Cash Flow
Free Cash Flow	112.92B	-218.65B	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 Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1584.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7267, the sentiment is Positive. The current price of 1584.5 is below the 20-day moving average (MA) of 1594.12, above the 50-day MA of 1580.25, and above the 200-day MA of 1536.49, indicating a neutral trend. The MACD of -8.20 indicates Positive momentum. The RSI at 50.75 is Neutral, neither overbought nor oversold. The STOCH value of 42.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7267.

Honda Motor Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7269	74 Outperform	$4.64T	11.13	12.95%	1.85%	2.99%	9.99%
7203	71 Outperform	¥49.85T	13.50	12.89%	2.78%	6.44%	11.88%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
7267	59 Neutral	$5.29T	12.90	5.23%	4.41%	-0.43%	-26.68%
7270	58 Neutral	$2.12T	20.90	9.73%	3.61%	1.04%	-31.52%
7272	57 Neutral	¥1.18T	74.94	1.38%	4.17%	-1.83%	-89.60%
7201	47 Neutral	$1.51T	-1.63	-16.69%	―	-3.01%	-755.71%

Honda Motor Co Corporate Events

Honda Consolidates Auto and SDV Development in R&D Arm to Boost Agility

Honda Motor Co. will transfer its automobile product development and software-defined vehicle functions to its wholly owned subsidiary Honda R&D via a simplified absorption-type company split effective April 1, 2026. The move will merge production model development with advanced technology research into a single end-to-end process, aiming to strengthen Honda’s R&D foundation, speed response to market shifts and support the rollout of more competitive vehicle offerings without affecting capital structure or liability performance.

Because the reorganization occurs between Honda and a wholly owned subsidiary, no shareholder resolution, consideration allotment or capital change is required, and Honda expects no issues with Honda R&D’s ability to meet assumed obligations. By consolidating assets, liabilities and contractual positions tied to automobile and SDV development within Honda R&D, the company is positioning itself to better manage the industry transition toward software-centric vehicles and enhance its long-term competitiveness in the global automotive market.

The most recent analyst rating on (JP:7267) stock is a Hold with a Yen1600.00 price target. To see the full list of analyst forecasts on Honda Motor Co stock, see the JP:7267 Stock Forecast page.

Honda Slashes Profit Outlook as Nine-Month Earnings Slide, Keeps Dividend Plan Intact

Honda reported consolidated results for the nine months to December 31, 2025 showing sales revenue of ¥15.98 trillion, down 2.2% year on year, with operating profit falling 48.1% to ¥591.5 billion and profit attributable to owners dropping 42.2%, reflecting a sharp deterioration in profitability despite slightly higher comprehensive income. Equity attributable to owners stood at ¥12.47 trillion with an equity ratio of 37.9%, while the company maintained its annual dividend plan at ¥70 per share and cut its full-year earnings forecast, projecting a 2.7% decline in sales and a more than 60% slump in profit, signaling pressure on margins and a more challenging outlook for shareholders and creditors.

The number of treasury shares rose significantly to about 1.39 billion, reducing the average shares outstanding and supporting per-share metrics despite weaker absolute earnings, but basic earnings per share still fell to ¥115.53 for the period. Honda’s revised full-year guidance of ¥550 billion in operating profit and ¥300 billion in profit attributable to owners, both down sharply from the prior year, underlines a tougher operating environment that may weigh on its competitive positioning and capital allocation flexibility even as it keeps dividend payouts stable.

The most recent analyst rating on (JP:7267) stock is a Hold with a Yen1600.00 price target. To see the full list of analyst forecasts on Honda Motor Co stock, see the JP:7267 Stock Forecast page.

Honda Acquires Additional Stake in Astemo to Boost SDV Capabilities

Honda Motor Co. has announced its decision to acquire an additional 21% equity interest in Astemo, Ltd., transforming it into a consolidated subsidiary. This strategic move aims to strengthen Honda’s position in the rapidly changing automotive industry, particularly in the development of software-defined vehicles, by leveraging Astemo’s expertise in both hardware and software technologies. The acquisition is expected to enhance Honda’s development capabilities and cost competitiveness, positioning Astemo as a key partner in achieving sustainable growth and solidifying its status as a global mega supplier.

The most recent analyst rating on (JP:7267) stock is a Buy with a Yen1900.00 price target. To see the full list of analyst forecasts on Honda Motor Co stock, see the JP:7267 Stock Forecast page.