Auto sales are expected to get a significant boost in the coming months as people continue to avoid public transportation. In fact, optimism surrounding the quick rollout of COVID-19 vaccines and the strength of the economic rebound should lead to a substantial surge in commercial fleet sales. Also, the continued recovery of the new light-vehicle market has also enhanced the growth prospects of the automotive industry…
However, with the demand for semiconductors outstripping the supply, the automobile industry is struggling to increase production. Given inefficient supply chains, even if the industry could get chips to move upstream more quickly, it could take a while for the manufacturers to benefit and increase production and deliver thy of their product. This situation has compelled a few automakers to cut production and even close plants.
Although Honda Motor Co., Ltd. (HMC – Get Rating) and Mazda Motor Corporation (MZDAY – Get Rating) are well positioned to navigate these challenges and capitalize on the industry tailwinds, we think NIO Inc. (NIO – Get Rating) and GreenPower Motor Company Inc. (GP – Get Rating) are suffering from the global chip shortage and could struggle to stay afloat in the near-term.
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Headquartered in Tokyo, Japan, HMC produces motorcycles, automobiles, power products, and other products. It operates through four segments: Motorcycle Business, Automobile Business, Financial Services Business, and Life creation and Other Businesses. In late 2015, the company added HondaJet aircraft services to its portfolio.
Last month, HMC unveiled a new upgraded aircraft, the HondaJet Elite S. The aircraft is an upgraded version of its previous model HondaJet Elite in terms of expanded operational capability and improved flight operation. The launch should help HMC grow its brand value significantly.
HMC’s sales revenue increased 4.8% year-over-year to ¥3.62 trillion ($33 billion) in the fourth fiscal quarter, ended March 31, 2021. Its operating profit came in at ¥213.2 billion ($1.94 billion) compared to a ¥5.6 billion ($0.05 billion)operating loss a year ago.
A $3.36 consensus EPS estimate for its fiscal period ending March 2023 indicates a 13.8% improvement year-over-year. A$137.43 billion consensus revenue estimate for its fiscal period ending March 2022 represents a 385.9% increase year-over-year. HMC’s stock has gained 18.1% over the past year.
HMC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Value and a grade of B for Growth and Stability. Among the 57 stocks in the Auto & Vehicle Manufacturers industry, it is ranked #2.
In total, we rate HMC on eight different components. Beyond what we’ve stated above, we have also given HMC grades for Momentum, Sentiment and Quality. Get the ratings here.
Based in Hiroshima, Japan, MZDAY manufactures passenger cars and commercial vehicles. Its principal products include four-wheeled vehicles, gasoline reciprocating engines, diesel engines, and automatic and manual transmissions for vehicles. The company’s businesses are in more than 130 countries and regions.
In April, MZDAY’s Mazda3 was named Canadian Car of the Year 2021 by the Automobile Journalists Association of Canada due to its high marks for Styling, Quality, Driver Position, Quietness, Performance, Vehicle Dynamics and Safety. It is the first vehicle to win the award for two consecutive years, following its win in 2020. This award should increase consumers’ trust in the brand and boost its sales.
The company reported ¥2.88 trillion ($27.3 billion) in net sales for its fiscal year ended March 31, 2021. Its selling, general and administrative expenses declined 14% year-over-year to ¥604.82 billion ($5.51 billion), while its non-operating expenses decreased 43.6% year-over-year to ¥13.07 billion ($0.12 billion) for the same period. Furthermore, MZDAY’s net cash from operating activities grew 244.7% year-over-year to ¥120.06 billion ($1.09 billion).
MZDAY is expected to…
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