One-glance verdict
Overvalued
$-13.88 our estimate vs market $31.44
Wall Street consensus: $33.27 (-339.7% lower than our fair-value estimate)
327% below our estimate, beyond the bull case
Fundamentals snapshot
Honda Motor Co., Ltd.
HMC · NYQ · Consumer Cyclical · Auto Manufacturers
Current price
$31.44
52-week range
$23.25 - $33.45
Market cap
$40.80B
Balance sheet
Distressed
-4.96x Concerning
Net debt $56.36B. 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 famous for its cars and motorcycles, which make up the bulk of its business. It also earns money by selling power equipment like generators and lawnmowers and by offering loans to help customers buy its vehicles. Because Honda sells big-ticket items all over the world, its financial health can offer clues about how confident people are about spending money in the global economy.
How the company got here
Founded by Soichiro Honda in 1948, the company started by making motorcycles and quickly became known for its reliable and efficient small engines. In the 1960s, Honda expanded into making cars, launching the popular Civic in 1972 and the Accord in 1976, which became major successes, especially in North America. A key moment was the 1986 launch of Acura, the first luxury brand from a Japanese automaker in the United States. Over the years, Honda has built a global reputation for engineering quality and has grown into one of the world's largest manufacturers of both motorcycles and automobiles.
What it actually does
Honda is a company that builds and sells a wide variety of machines that help people move and get work done. Most people know Honda for its cars, like the Civic and Accord, and its motorcycles, which range from small scooters to large touring bikes. Beyond personal vehicles, the company also makes power equipment you might use in your yard, such as lawn mowers, generators, and snow blowers. It also provides financing (loans and leases) to help customers buy its products.
Automobile Business
This is Honda's largest business segment, making up the majority of its sales. It designs, manufactures, and sells a wide range of vehicles, including well-known passenger cars like the Civic and Accord, SUVs like the CR-V and Pilot, and minivans. This segment also includes the company's luxury brand, Acura. Customers are everyday consumers and businesses who buy these vehicles from Honda dealerships around the world.
Motorcycle Business
This is Honda's original and highly profitable business, where it holds the largest market share in the world. This division produces a vast array of two-wheeled vehicles, from small scooters for city commuting to large, powerful motorcycles for sport and long-distance travel. It also makes off-road vehicles like ATVs (all-terrain vehicles). The customers are individuals worldwide who buy these for transportation, work, or recreation.
Financial Services Business
This part of the company helps people buy Honda's main products, especially cars and motorcycles. It provides financing options, which are essentially loans or leasing (long-term rental) plans, directly to customers through dealerships. It also provides wholesale financing (loans to the dealerships themselves to help them stock enough vehicles). This segment earns money from the interest and fees charged on these loans and leases, making it a significant contributor to Honda's overall business.
Power Product and Other Businesses
This is Honda's most diverse and smallest segment, covering a wide range of machinery. It makes and sells items like lawn mowers, generators, water pumps, snow blowers, and boat engines for both homeowners and professional use. This segment also includes the HondaJet, a small private aircraft. The customers for these products are varied, ranging from individuals doing yard work to businesses needing reliable power equipment.
What management is betting on now
Honda's leadership is currently focused on navigating the shift to electric vehicles (EVs) while strengthening its existing profitable businesses. Recognizing that the move to all-electric cars may be slower than first thought, they are increasing investment in hybrid vehicles, which combine a gasoline engine with an electric motor. The company plans to launch a new wave of next-generation hybrid models starting in 2027 to meet current high demand. At the same time, Honda continues to invest in future technologies, aiming for carbon neutrality (a state of net-zero carbon dioxide emissions) for all its products and corporate activities by 2050.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $-13.88 vs current price $31.44
Wall Street consensus is the average analyst price target: $33.27 (-339.7% lower than our fair-value estimate).
Our most-likely fair value is $-13.88 a share — about 144.1% below today's price of $31.44, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $56.4B. Interest coverage -5.0x.
Net debt
$56.36B
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 $91.31B Interest coverage -4.96x This is the baseline the peer rows are being compared against.
Total debt $279.17B 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 $58.77B Interest coverage -15.06x Neither company has much profit cushion over interest right now.
Total debt $58.35B 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 4.2% 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
—
P/B
0.52x
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
$91.31B
Total cash
$34.95B
Growth
How the business has been compounding
Revenue TTM
$143.02B
Revenue 5Y CAGR
8.8%
EPS TTM
-0.70
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$7.21B
Free CF TTM
$1.51B
FCF margin
1.1%
Dividend
Shareholder payout
Yield
4.2%
Payout ratio
55.4%
Last ex-div date
2026-03-30