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Top 5 Auto Stocks by Wall Street Ratings in September 2017

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13
Part 5
Top 5 Auto Stocks by Wall Street Ratings in September 2017 PART 5 OF 13

Honda Ranks 4th in Top 5 Auto Stocks Based on Analyst Ratings

Honda Motor in top 5 auto stocks

According to analysts’ consensus ratings, 39.0% of analysts covering Honda Motor (HMC) gave it a “buy” recommendation. That made the second-largest Japanese automaker in fourth place on our list of the top five auto stocks according to analyst ratings. Another 57.0% of analysts suggested a “hold,” while the remaining 4.0% gave it a “sell” recommendation.

These recommendations are based on 23 analysts’ consensus data compiled by Thomson Reuters.

Honda Ranks 4th in Top 5 Auto Stocks Based on Analyst Ratings

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Honda has risen 2.5% in 2017 so far, which was much lower than the 11.5% rise for the S&P 500 (SPY).

12-month return potential

Analysts’ 12-month consensus target price for HMC was $32.20 as of September 25, 2017. That shows a positive return potential of 7.6% from its market price of $29.93.

Honda’s consensus target price has seen an upward revision in the last couple of months to $32.20 from $30.64 about two months ago.

Honda Motor is not directly listed on any stock exchange in the US market, but its ADR (American depositary receipt) is traded on the NYSE (New York Stock Exchange) like its Japanese peer Toyota Motor (TM).

How do fundamentals look?

In 2016, Honda was the only mainstream automaker to report a YoY (year-over-year) increase in US auto sales, unlike its peers (VCR) General Motors (GM), Ford (F), and Toyota.

In fiscal 1Q18 (April 1, 2017, through June 30, 2017), Honda’s net profitability improved significantly as it reported a 19.0% YoY rise in net profits for the quarter.

In August, Honda’s US sales continued to fall for the second consecutive month. It reported a 2.4% fall in its US market sales.

On the brighter side, Honda’s US truck sales have risen 3.5% YoY in the first eight months of 2017. A strong growth rate for truck sales was better than for many of its peers. Heavyweight vehicles such as trucks tend to yield higher margins for automakers. That could be the primary reason analysts are still maintaining a positive view on Honda.

In the next part of this series, we’ll look at the last highly rated auto stock on our top five list.

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