NEW YORK (TheStreet) -- Honda Motor (HMC) - Get Report shares are down 0.78% to $33.25 in trading on Monday after the Japanese automaker announced that its CEO Takanobu Ito would be stepping down in June.
The 61 year old Ito, who has been the company's CEO since 2009, will hand the company over to 55 year old Managing Officer Takahiro Hachigo, his handpicked replacement.
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The managerial transition comes in the midst of the company's record number of recalls due to the faulty and deadly Takata Corp. (TYO) - Get Report air bags scandal that has affected multiple car companies around the world.
Honda announced the change at the close of trading on the Japanese market today with the stock declining 0.9% in trading on Monday.
The company lowered its guidance for the second time in two quarters a couple of weeks ago due to the fallout from the recall. The company also announced earlier this month that it is shelving its 6 million vehicle by 2017 sales target in an effort to focus engineers attention on quality over quantity.
TheStreet Ratings team rates HONDA MOTOR CO LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HONDA MOTOR CO LTD (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 attractive valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $1,666.64 million or 15.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.82%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market on the basis of return on equity, HONDA MOTOR CO LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.2%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HONDA MOTOR CO LTD's earnings per share declined by 32.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HONDA MOTOR CO LTD increased its bottom line by earning $3.10 versus $2.17 in the prior year. For the next year, the market is expecting a contraction of 15.7% in earnings ($2.61 versus $3.10).
- You can view the full analysis from the report here: HMC Ratings Report