Fundamentals snapshot
HMC · NYQ · Consumer Cyclical · Auto Manufacturers
Current price
$26.97
52-week range
$23.25 - $34.89
Market cap
$34.99B
One-glance verdict
Fair-value range $89.12 – $109.86 (cautious → optimistic — tap the ? for the math)
Wall Street consensus: $28.28 (-68.3% lower than our fair-value estimate)
Buy below $71.30 for a 20% safety cushion
Balance sheet
Net debt $52.66B. Interest coverage shows how many times profit covers the interest bill.
What stands out
Quick scan of the biggest positives and negatives from the detailed checklist below.
What this company does
Honda is a global company from Japan best known for making cars and motorcycles, but it also sells power equipment like generators and lawnmowers. The company makes most of its money from selling cars, followed by motorcycles. Honda also has a large financing business that provides loans and leases to help people and dealerships buy its products.
Honda Motor Co., Ltd. was started in Japan in 1948 by Soichiro Honda and Takeo Fujisawa, first making engines for bicycles before creating their first motorcycle, the "Dream" D-type, in 1949. The company grew quickly, becoming the world's largest motorcycle manufacturer by 1959, the same year it expanded to the United States. In the 1960s, Honda began making cars, introducing iconic models like the Civic and Accord in the 1970s, which were known for being fuel-efficient and reliable. A major turning point was the creation of the CVCC engine, which met strict U.S. Clean Air Act standards without needing a catalytic converter, a device that reduces harmful emissions. In 1986, Honda became the first Japanese automaker to launch a dedicated luxury brand, Acura.
Honda is a company that makes and sells a wide variety of products that people use for transportation and work. Most people know Honda for its cars, like the Civic and Accord, and its motorcycles. Beyond cars and motorcycles, the company also manufactures a range of other machines, including lawn mowers, generators, boat engines, and even small jet aircraft. Essentially, Honda is one of the world's largest engine makers, and it puts those engines into many different products. The company also provides financing (loans and leases) to help customers buy its products.
This is Honda's largest business segment by sales, responsible for making and selling cars, light trucks, and minivans that people drive every day. Familiar models like the Civic, Accord, and CR-V are all part of this division, which also includes the company's luxury brand, Acura. Customers for this segment are individuals and families around the world who buy vehicles from Honda dealerships. While it brings in the most money, its profitability can be lower than other parts of the company. This segment makes up the majority of Honda's total revenue (the total money earned from sales).
This is Honda's original business and a huge part of its identity; it has been the world's top motorcycle seller since 1959. This segment produces a wide range of two-wheeled vehicles, from small scooters for city commuting to large motorcycles for touring, as well as all-terrain vehicles (ATVs). Its customers are global, with especially strong sales in Asia and South America where motorcycles are a primary form of transportation. Although it generates less revenue than the automobile business, the motorcycle segment is often more profitable, meaning it keeps a larger portion of each sales dollar as profit.
This part of the company makes and sells a diverse range of equipment, mostly powered by Honda's well-known engines. Products include lawn mowers, generators, water pumps, snow blowers, and boat engines. This segment also includes the company's ventures into aviation with the HondaJet, a small business jet. Customers are both everyday homeowners and commercial businesses that need reliable power equipment. This is a smaller slice of Honda's overall business compared to cars and motorcycles.
This segment acts like a bank specifically for Honda customers and dealerships. It provides financing options, such as loans and leases, to help people buy Honda's cars, motorcycles, and power equipment. It also provides wholesale financing (loans to dealerships) so that dealers can stock enough products in their showrooms. This business makes money from the interest and fees on these loans and leases, and its success is closely tied to how many vehicles and products the other segments are selling.
Honda's leadership is currently focused on navigating the shift to electric vehicles (EVs) while also strengthening its popular hybrid models. Recognizing that demand for fully electric cars is growing slower than expected, the company is reallocating resources to develop and launch a new generation of hybrid vehicles, which combine a gasoline engine with an electric motor. The company is also investing heavily in making its manufacturing more efficient and reducing development costs for new vehicles. In the long term, Honda remains committed to carbon neutrality (removing as much carbon dioxide from the atmosphere as it produces) by 2050 and continues to research future technologies like solid-state batteries for EVs.
Price history
Is it cheap or expensive?
Wall Street consensus is the average analyst price target: $28.28 (-68.3% lower than our fair-value estimate).
Buy below $71.30 for a 20% safety cushion. That means buying at least 20% below our fair value, as a buffer in case our estimate turns out too rosy.
Our most-likely fair value is $89.12 a share — about 230.4% above today's price of $26.97, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Net debt $52.7B. Interest coverage 22.1x.
Honda Motor Co., Ltd.'s profit covers its interest bill about 22.1 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Total debt $86.16B Interest coverage 22.10x This is the baseline the peer rows are being compared against.
Total debt $269.84B Interest coverage 43.42x +96% vs HMC Carries about 2.0x more debt cushion than HMC.
Total debt $128.77B Interest coverage 4.00x -82% vs HMC Carries about 5.5x less debt cushion than HMC.
Total debt $159.51B Interest coverage -6.88x -100% vs HMC This peer has almost no interest-payment cushion compared with HMC.
Total debt $55.30B Interest coverage -15.06x -100% vs HMC This peer has almost no interest-payment cushion compared with HMC.
Total debt $55.71B Interest coverage 0.90x -96% vs HMC Carries about 24.5x less debt cushion than HMC.
What you should know
The numbers
Tap any ? icon to learn what it means.
Valuation
Profitability
Health
Growth
Cash flow
Dividend
Metric explainer
Debt comparison
What you should know