One-glance verdict
Overvalued
$-15.70 our estimate vs market $32.67
Wall Street consensus: $32.90 (-309.6% lower than our fair-value estimate)
308% below our estimate, beyond the bull case
Fundamentals snapshot
Honda Motor Co., Ltd.
HMC · NYQ · Consumer Cyclical · Auto Manufacturers
Current price
$32.67
52-week range
$23.25 - $34.89
Market cap
$42.39B
Balance sheet
Distressed
-4.96x Concerning
Net debt $56.81B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 0.5% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Return on equity was -0.8% last year — the company lost money on shareholders' equity.
- Risk Insider ownership is only 0.0% (peer median: 0.2%).
What this company does
Honda Motor Co., Ltd.
Honda is a global company known for making cars, motorcycles, and power equipment like lawnmowers, but the vast majority of its money comes from selling automobiles. To boost its main business, Honda also provides its own loans and leases to customers, making it easier for people to buy its vehicles. This mix of popular products and in-house financing gives the company a reliable way to support its sales around the world.
How the company got here
Honda Motor Company was founded in Japan in 1948 by Soichiro Honda, initially producing engines for bicycles. The company's first complete motorcycle, the "Dream" D-Type, was released in 1949, and by 1964, Honda had become the world's largest motorcycle manufacturer. Honda entered the automobile market in 1963 with the T360 mini pick-up truck. Key turning points include the launch of the popular Civic and Accord models and the creation of the Acura luxury brand in 1986, the first for a Japanese automaker.
What it actually does
Most people know Honda for its cars and motorcycles, like the Civic, Accord, and CR-V, or their wide range of bikes from scooters to large touring models. However, the company also makes a variety of other products you might see in your daily life, such as lawnmowers, generators, boat engines, and even small jet aircraft. Essentially, Honda is a massive engine manufacturer that puts its technology into many different types of machines to help people with transportation and work.
Automobile Business
This is Honda's largest business segment, responsible for the majority of its revenue (the total money a company brings in from sales). It designs, manufactures, and sells passenger cars, SUVs, and minivans under the Honda and Acura brands. You've likely seen many of their popular models on the road, such as the Civic, Accord, and CR-V. This division makes money by selling these vehicles to customers through a global network of dealers.
Motorcycle Business
This is the original and core part of Honda's identity; it's the world's largest motorcycle manufacturer. This segment produces a wide variety of two-wheeled vehicles, from small scooters for city commuting to large, powerful bikes for sport and long-distance travel. It also includes all-terrain vehicles (ATVs) and side-by-sides. This business is a major profit engine for the company, especially in Asian markets, and contributes a significant portion of total sales.
Financial Services Business
This part of the company helps people buy Honda's products. It offers financing (loans) and leasing options to customers who want to purchase a Honda or Acura vehicle. It also provides wholesale financing to dealers, which helps them stock their showrooms with enough cars and motorcycles. This segment earns money through the interest and fees charged on these loans and leases, supporting the sales of the main automotive business.
Power Product and Other Businesses
This is Honda's most diverse and smallest segment in terms of revenue. It includes a wide range of products powered by Honda engines, such as lawn mowers, generators, snow blowers, water pumps, and outboard motors for boats. This division also includes the company's venture into aerospace with the HondaJet aircraft. It makes money by selling these useful machines to both individuals and businesses for work and recreation.
What management is betting on now
Honda is currently focused on a major shift toward electric and hybrid vehicles, aiming for all its global sales to be electric or fuel-cell vehicles by 2040. However, recognizing that the transition to fully electric cars is slowing down, the company is also increasing its investment in hybrid models, which combine a gasoline engine with an electric motor. The company is also investing heavily in software for its cars and working to make its manufacturing processes more efficient to reduce costs. A key goal is to achieve carbon neutrality (offsetting all carbon emissions) for all its products and corporate activities by 2050.
Price history
How the share price has moved
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Loading price history…
Is it cheap or expensive?
Fair value $-15.70 vs current price $32.67
Wall Street consensus is the average analyst price target: $32.90 (-309.6% lower than our fair-value estimate).
Our most-likely fair value is $-15.70 a share — about 148.0% below today's price of $32.67, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $56.8B. Interest coverage -5.0x.
Net debt
$56.81B
Interest coverage
-4.96x
Honda Motor Co., Ltd.'s profit covers its interest bill about 0.0 times over. which is weaker 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.
Distressed
Worse cushion
Baseline
Better cushion
HMC
BASELINE
Honda Motor Co., Ltd.
Total debt $92.02B Interest coverage -4.96x This is the baseline the peer rows are being compared against.
Total debt $281.35B Interest coverage 62.47x This peer still has a real interest-payment cushion, while HMC does not.
Total debt $128.77B Interest coverage 4.00x This peer still has a real interest-payment cushion, while HMC does not.
Total debt $163.30B Interest coverage -6.88x Neither company has much profit cushion over interest right now.
Total debt $60.54B Interest coverage -15.06x Neither company has much profit cushion over interest right now.
Total debt $58.81B Interest coverage 0.51x This peer still has a real interest-payment cushion, while HMC does not.
What you should know
The case for and against HMC
3 Rewards
2 Risks
Rewards
-
Revenue grew 0.5% last year.
-
Free cash flow was positive in 3/10 years.
-
Dividend yield is 4.1% with 39-year payout history.
Risks
-
Return on equity was -0.8% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 0.0% (peer median: 0.2%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
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P/B
0.54x
P/S
0.00x
EV/EBITDA
7.16x
PEG ratio
3.45x
Profitability
How much profit each dollar creates
Gross margin
17.4%
Operating margin
8.8%
Net margin
-0.8%
ROE
-0.8%
ROA
-0.2%
Health
Liquidity and balance-sheet strength
Debt / equity
1.14x
Current ratio
1.29x
Quick ratio
0.95x
Total debt
$92.02B
Total cash
$35.22B
Growth
How the business has been compounding
Revenue TTM
$144.14B
Revenue 5Y CAGR
8.8%
EPS TTM
-0.70
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$7.27B
Free CF TTM
$1.52B
FCF margin
1.1%
Dividend
Shareholder payout
Yield
4.1%
Payout ratio
55.4%
Last ex-div date
2026-03-30