HMCHonda Motor Co., Ltd.
Is the business good?
The checks split: nothing decisive, though thin cash backing (0.4×).
Operating profit outpaces operating cash flow, watch accruals and working capital. Conversion is worsening vs a year ago.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
A balanced mix of margins, efficiency, and leverage. ROE 7% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is HMC?
Honda Motor Co., Ltd. earns 5.0% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 4.0 points below what the capital costs: growth destroys value
- Operating margin
- 5.6%
Operating margin · Auto Manufacturers median −3.6% · fiscal year to FY2025
- Cash conversion
- 0.35×
Cash conversion · 0.75× a year ago · the operating profit has not turned into cash yet
- Share count, year on year
- −4.7%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | 4.2% |
| FY2021 | 5.0% |
| FY2022 | 6.0% |
| FY2023 | 4.6% |
| FY2024 | 6.8% |
| FY2025 | 5.6% |
Details›
- Gross marginfiscal year to FY2025
- 22%
- Operating marginfiscal year to FY2025
- 5.6%
- Net marginfiscal year to FY2025
- 3.9%
- Free cash flow margin
- −1.0%
- R&D as % of revenue
- 5.1%
- Revenue, trailing twelve months
- $21.69T
- Free cash flow, trailing twelve months
- −$218.7B
- Net income, trailing twelve months
- $835.8B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 5.0%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Auto Manufacturers
Ranks #1 of 10 by RyuScore