Honda's (HMC) Q3 Earnings Rise Y/Y, Revenues Beat Estimates

Honda Motor Co., Ltd. HMC reported consolidated income of ¥570.2 billion or ¥318.50 per share ($2.82 per ADR) in the third quarter of fiscal 2018 (ended Dec 31, 2017), up ¥224.83 from the year-ago period. The Zacks Consensus Estimate for earnings per share during the quarter was 78 cents.

Consolidated sales revenues increased 13% year over year to ¥3.96 trillion ($35.06 billion). The figure surpassed the Zacks Consensus Estimate of $33.1 billion. The year-over-year increase can be attributed to higher revenues in all business operations.

Consolidated operating profit came in at ¥284.5 billion, reflecting an increase of 37% from the prior-year quarter. The rise was due to an increase in sales volume and model mix, which were offset by a rise in selling, general and administrative (SG&A) expenses.

Segment Performance

For the three months ended Dec 31, 2017, sales revenues in the Automobile segment increased 11.7% to ¥2.9 trillion. During the quarter, unit sales increased from 1.31-1.34 million vehicles. The Motorcycle segment increased 18.7% to ¥499.1 million whereas unit sales increased from 4.52-4.87 million vehicles.

In the quarter ended Dec 31, 2017, the Financial Services segment increased 15.7% to ¥527.1 million ($46.5 billion). During the quarter, unit sales increased from 9.64-9.87 million vehicles. The Power Product & Other segment was up 16.4% to ¥93.4 million whereas unit sales increased from 1.18-1.20 million vehicles.

Financial Position

Consolidated cash and cash equivalents were ¥2.21 trillion as of Dec 31, 2017, up from ¥2.11 trillion as of Mar 31, 2017.

Guidance

For fiscal 2018 (ending Mar 31, 2018), Honda expects revenues to improve 8.6% to ¥15.2 trillion. Operating income is likely to decline 7.8% to ¥775 billion. Profit before income taxes is projected to rise 3.8% to ¥1.05 trillion.

Zacks Rank & Key Picks

Honda has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Oshkosh Corporation OSK, Daimler A.G. DDAIF and Volkswagen A.G. VLKAY, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oshkosh has an expected long-term growth rate of 14.5%. Shares of the company have surged 28.2% in the last six months.

Daimler has an expected long-term growth rate of 2.8%. In the last six months, shares of the company have rallied 26.3%.

Volkswagen has an expected long-term growth rate of 18.7%. The stock has gained 40.5% in the last three months.

Honda Motor Company, Ltd. Price, Consensus and EPS Surprise

Honda Motor Company, Ltd. Price, Consensus and EPS Surprise | Honda Motor Company, Ltd. Quote

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