Honda Motor Co., Ltd. : In an accumulation phase

08/30/2021 | 03:55am EDT

Tommy Douziech

long trade Target price hit

Entry price : 3247¥ | Target : 3640¥ | Stop-loss : 3059¥ | Potential : 12.1%

Honda Motor Co., Ltd. shares are locked into a trading range. This phase will eventually have to end with a return of a clear trend. Investors have an opportunity to buy the stock and target the ¥ 3640.

Summary

• The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
• The company presents an interesting fundamental situation from a short-term investment perspective.
• The company has a good ESG score relative to its sector, according to Refinitiv.

Strengths

• The equity is one of the most attractive in the market with regard to earnings multiple-based valuation.
• The stock, which is currently worth 2022 to 0.72 times its sales, is clearly overvalued in comparison with peers.
• The company's share price in relation to its net book value makes it look relatively cheap.
• The company is one of the best yield companies with high dividend expectations.
• Over the past year, analysts have regularly revised upwards their sales forecast for the company.
• Over the last 4 months, analysts have significantly revised upwards the company's estimated sales.
• For the last twelve months, analysts have been gradually revising upwards their EPS forecast for the upcoming fiscal year.
• Analysts covering this company mostly recommend stock overweighting or purchase.
• The difference between current prices and the average target price is rather important and implies a significant appreciation potential for the stock.
• Over the past four months, analysts' average price target has been revised upwards significantly.
• The group usually releases upbeat results with huge surprise rates.

Weaknesses

• The company's profitability before interest, taxes, depreciation and amortization characterizes fragile margins.
• The group shows a rather high level of debt in proportion to its EBITDA.
• The overall consensus opinion of analysts has deteriorated sharply over the past four months.

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