The following ratings changes were generated on Thursday, Oct. 16
We've downgraded Honda Motor (HMC - Get Report) from buy to hold. Strengths include its revenue growth, notable return on equity and compelling growth in net income. Weaknesses include a decline in the stock price during the past year, generally poor debt management and poor profit margins.
Honda's revenue growth of 13.7% over the same quarter last year outpaced the industry average of 12.4%. Return on equity has improved slightly, outperforming both the industry average and the S&P 500. Net operating cash flow has significantly increased by 59.19% to $3,113.27 million, but Honda is still growing at a significantly lower rate than the industry average of 616.86%.
Honda's debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. The company also maintains poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems. Shares plunged 37.95% on the year, apparently at least in part dragged down by the decline we have seen in the S&P 500. However, the stock is still more expensive (when compared with its current earnings) than most other companies in its industry.