January 11, 2024
Top 10 Stock Honda Motor Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Honda Motor – Top 10 Stock in Tokyo Stock Exchange TOPIX 100
Honda Motor is listed as a top 10 stock on January 11, 2024 in the market index TOPIX 100 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for Honda Motor on January 11, 2024.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Automobile Manufacturers |
| Index | TOPIX 100, Nikkei 225 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Honda Motor Strong Buy
| 360 METRICS | January 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 97 |
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| GROWTH | ||||||||
| GROWTH | 47 |
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| SAFETY | ||||||||
| SAFETY | 59 |
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| SENTIMENT | ||||||||
| SENTIMENT | 56 |
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| 360° VIEW | ||||||||
| 360° VIEW | 80 |
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ANALYSIS: With an Obermatt 360° View of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Honda Motor are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Honda Motor. The consolidated Value Rank has an attractive rank of 97, which means that the share price of Honda Motor is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 97% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 59. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 56. But the consolidated Growth Rank has a low rank of 47, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 53 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 80, Honda Motor is better positioned than 80% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 97), secure financing practices (Safety Rank of 59), and positive market sentiment in the professional investor community (Sentiment Rank of 56). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 47), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Honda Motor is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Honda Motor positive
ANALYSIS: With an Obermatt Sentiment Rank of 56 (better than 56% compared with alternatives), overall professional sentiment and engagement for the stock Honda Motor is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Honda Motor. Analyst Opinions are at a rank of 48 (worse than 52% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 63, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Honda Motor. More encouragingly, the Professional Investors rank is 89, which means that professional investors hold more stock in this company than in 89% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 15, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 85% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 56 (more positive than 56% compared with investment alternatives), Honda Motor has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Honda Motor. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...read more
Value Strategy: Honda Motor Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 97 (better than 97% compared with alternatives) for 2024, Honda Motor shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Honda Motor. Price-to-Sales is 74 which means that the stock price compared with what market professionals expect for future sales is lower than for 74% of comparable companies, indicating a good value for Honda Motor's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 85% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 97. Compared with other companies in the same industry, dividend yields of Honda Motor are expected to be higher than for 85% of all competitors (a Dividend Yield rank of 85). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 97, is a buy recommendation based on Honda Motor's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Honda Motor based on its detailed value metrics.
Growth Strategy: Honda Motor Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 47 (better than 47% compared with alternatives), Honda Motor shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Honda Motor. Capital Growth has a rank of 55, which means that currently professionals expect the company to grow its invested capital more than 49% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 81 (above 81% of alternative investments). But Sales Growth has only a rank of 26, which means that, currently, professionals expect the company to grow less than 74% of its competitors, and Profit Growth is also low at a rank of 49. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 47, is a hold recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Honda Motor, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Honda Motor Debt Financing Safety above-average
| SAFETY METRICS | January 11, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 34 |
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| REFINANCING | ||||||||
| REFINANCING | 59 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 61 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 59 |
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ANALYSIS: With an Obermatt Safety Rank of 59 (better than 59% compared with alternatives), the company Honda Motor has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Honda Motor is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Honda Motor. Refinancing is at 59, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 59% of its competitors. Liquidity is also good at 61, meaning the company generates more profit to service its debt than 61% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 34, which means the company has an above-average debt-to-equity ratio. It has more debt than 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 59 (better than 59% compared with alternatives), Honda Motor has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Honda Motor could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Honda Motor Top Financial Performance
| COMBINED PERFORMANCE | January 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 97 |
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| GROWTH | ||||||||
| GROWTH | 47 |
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| SAFETY | ||||||||
| SAFETY | 61 |
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| COMBINED | ||||||||
| COMBINED | 81 |
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ANALYSIS: With an Obermatt Combined Rank of 81 (better than 81% compared with investment alternatives), Honda Motor (Automobile Manufacturers, Japan) shares have much better financial characteristics than comparable stocks. Shares of Honda Motor are a good value (attractively priced) with a consolidated Value Rank of 97 (better than 97% of alternatives), are safely financed (Safety Rank of 59, which means low debt burdens), but show below-average growth (Growth Rank of 47). ...read more
RECOMMENDATION: A Combined Rank of 81, is a strong buy recommendation based on Honda Motor's financial characteristics. As the company Honda Motor's key financial metrics exhibit good value (Obermatt Value Rank of 97) but low growth (Obermatt Growth Rank of 47) while being safely financed (Obermatt Safety Rank of 59), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 97% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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