Honda Motor (HMC - Get Report) also saw moderate gains, closing 13% higher to $38.27. The company reported September U.S. sales dropped 9.9% to 105,563 compared with the year-ago quarter. Year-to-date sales, however, are up 7.9% over 2012.
TheStreet Ratings team rates Honda Motor as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate Honda Motor (HMC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had subpar growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $3,066.12 million or 38.68% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.02%.
- The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
- Honda Motor 's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Honda Motor increased its bottom line by earning $2.17 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($2.41 vs. $2.17).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.2%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: HMC Ratings Report
Written by Keris Alison Lahiff.
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