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Honda (HMC) Beats on Q3 Earnings, Misses Revenue Estimates
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Honda Motor Co., Ltd. (HMC - Free Report) reported consolidated income of ¥168.8 billion ($1.55 billion) or ¥93.67 per share (86 cents per ADR) in the third quarter (ended Dec 31, 2016) of fiscal 2017. Earnings per share surpassed the Zacks Consensus Estimate of 49 cents. Consolidated income increased 35.9% from the year-ago quarter, while the earnings per share were up 24.76%.
Consolidated net sales and other operating revenues declined 3.2% year over year to ¥3.50 trillion ($32.11 billion). The figure also missed the Zacks Consensus Estimate of $33.01 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset higher revenues in financial services, automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥207.6 billion ($1.9 billion), up 27.4% from the prior-year quarter. The improvement was backed by cost-reduction efforts and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects.
Honda Motor Company, Ltd. Price, Consensus and EPS Surprise
Revenues in the Automobile segment fell 3.3% to ¥2.60 trillion ($23.85 billion) owing to unfavorable foreign currency translation effects. Unit sales increased 5.2% from the year-ago period to 925,000 vehicles. Meanwhile, operating profit amounted to ¥129.8 billion ($1.19 billion), up 86.6% year over year, on cost-reduction efforts and lower SG&A expenses.
Revenues in the Motorcycle segment decreased 4.9% to ¥420.6 billion ($3.86 billion) due to unfavorable foreign currency translation effects, which offset the 0.8% increase in consolidated unit sales to 2.67 million motorcycles. Operating income fell 15.4% to ¥41.8 billion ($383.49 million) owing to unfavorable foreign currency translation effects, which offset the benefits of cost-reduction efforts.
Revenues in the Financial Services segment improved 1.8% to ¥455.7 billion ($4.18 billion). However, operating income declined 17.7% to ¥42.3 billion ($388.07 million) on higher SG&A expenses and unfavorable foreign currency translation effects.
Revenues in the Power Product and Other segment fell 2.1% to ¥80.3 billion ($736.70 million) in the reported quarter. The decline resulted from unfavorable foreign currency translation effects and lower consolidated unit sales. Unit sales in the segment dropped 0.2% to 1.18 million. The segment's operating loss was ¥6.3 billion ($57.80 million), wider than the loss of ¥7.4 billion ($60.66 million) in the year-ago quarter due to lower SG&A expenses in other businesses operations.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.80 trillion ($16.51 billion) as of Dec 31, 2016, up from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In the first nine months of fiscal 2017, cash flow from operations declined 52.2% to ¥458.28 billion ($4.20 billion).
Guidance
For fiscal 2017, Honda expects revenues to decline 5.5% to ¥13.8 trillion ($128.97 billion), higher than the previous guidance of ¥13.4 trillion ($130.1 billion). Operating income is likely to grow 55.9% to ¥785 billion ($7.34 billion), up from the previous estimate of ¥650 billion ($6.31 billion). Net income is projected to improve 58.2% to ¥545 billion ($5.09 billion) or ¥302.39 ($2.83) per share, up from the previous expectation of to ¥415 billion ($4.03 billion) or ¥230.26 ($2.24) per share.
Price Performance
The performance of Honda’s shares has been stronger than the Zacks categorized Automotive-Foreign industry over the last three months. The stock’s price has increased 6.5%, while the industry has recorded gains of 2.9%.
Other favorably placed companies in the auto space include Penske Automotive Group, Inc. (PAG - Free Report) , Fox Factory Holding Corp (FOXF - Free Report) and GKN plc .
Penske Automotive has an expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy).
Fox Factory holds a Zacks Rank #2. The company has an expected earnings growth rate of 16.6% over the long term.
GKN carries a Zacks Rank #2 and has long-term growth rate of 6.4%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
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Honda (HMC) Beats on Q3 Earnings, Misses Revenue Estimates
Honda Motor Co., Ltd. (HMC - Free Report) reported consolidated income of ¥168.8 billion ($1.55 billion) or ¥93.67 per share (86 cents per ADR) in the third quarter (ended Dec 31, 2016) of fiscal 2017. Earnings per share surpassed the Zacks Consensus Estimate of 49 cents. Consolidated income increased 35.9% from the year-ago quarter, while the earnings per share were up 24.76%.
Consolidated net sales and other operating revenues declined 3.2% year over year to ¥3.50 trillion ($32.11 billion). The figure also missed the Zacks Consensus Estimate of $33.01 billion. The year-over-year decline can be attributed to unfavorable foreign currency translation effects which offset higher revenues in financial services, automobile and motorcycle business operations.
Consolidated operating profit amounted to ¥207.6 billion ($1.9 billion), up 27.4% from the prior-year quarter. The improvement was backed by cost-reduction efforts and a decrease in selling, general and administrative (SG&A) expenses that include quality-related expenses. These factors offset the unfavorable currency effects.
Honda Motor Company, Ltd. Price, Consensus and EPS Surprise
Honda Motor Company, Ltd. Price, Consensus and EPS Surprise | Honda Motor Company, Ltd. Quote
Segment Performance
Revenues in the Automobile segment fell 3.3% to ¥2.60 trillion ($23.85 billion) owing to unfavorable foreign currency translation effects. Unit sales increased 5.2% from the year-ago period to 925,000 vehicles. Meanwhile, operating profit amounted to ¥129.8 billion ($1.19 billion), up 86.6% year over year, on cost-reduction efforts and lower SG&A expenses.
Revenues in the Motorcycle segment decreased 4.9% to ¥420.6 billion ($3.86 billion) due to unfavorable foreign currency translation effects, which offset the 0.8% increase in consolidated unit sales to 2.67 million motorcycles. Operating income fell 15.4% to ¥41.8 billion ($383.49 million) owing to unfavorable foreign currency translation effects, which offset the benefits of cost-reduction efforts.
Revenues in the Financial Services segment improved 1.8% to ¥455.7 billion ($4.18 billion). However, operating income declined 17.7% to ¥42.3 billion ($388.07 million) on higher SG&A expenses and unfavorable foreign currency translation effects.
Revenues in the Power Product and Other segment fell 2.1% to ¥80.3 billion ($736.70 million) in the reported quarter. The decline resulted from unfavorable foreign currency translation effects and lower consolidated unit sales. Unit sales in the segment dropped 0.2% to 1.18 million. The segment's operating loss was ¥6.3 billion ($57.80 million), wider than the loss of ¥7.4 billion ($60.66 million) in the year-ago quarter due to lower SG&A expenses in other businesses operations.
Financial Position
Consolidated cash and cash equivalents amounted to ¥1.80 trillion ($16.51 billion) as of Dec 31, 2016, up from ¥1.76 trillion ($17.1 billion) as of Mar 31, 2016.
In the first nine months of fiscal 2017, cash flow from operations declined 52.2% to ¥458.28 billion ($4.20 billion).
Guidance
For fiscal 2017, Honda expects revenues to decline 5.5% to ¥13.8 trillion ($128.97 billion), higher than the previous guidance of ¥13.4 trillion ($130.1 billion). Operating income is likely to grow 55.9% to ¥785 billion ($7.34 billion), up from the previous estimate of ¥650 billion ($6.31 billion). Net income is projected to improve 58.2% to ¥545 billion ($5.09 billion) or ¥302.39 ($2.83) per share, up from the previous expectation of to ¥415 billion ($4.03 billion) or ¥230.26 ($2.24) per share.
Price Performance
The performance of Honda’s shares has been stronger than the Zacks categorized Automotive-Foreign industry over the last three months. The stock’s price has increased 6.5%, while the industry has recorded gains of 2.9%.
Zacks Rank & Key Picks
Currently, Honda has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other favorably placed companies in the auto space include Penske Automotive Group, Inc. (PAG - Free Report) , Fox Factory Holding Corp (FOXF - Free Report) and GKN plc .
Penske Automotive has an expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy).
Fox Factory holds a Zacks Rank #2. The company has an expected earnings growth rate of 16.6% over the long term.
GKN carries a Zacks Rank #2 and has long-term growth rate of 6.4%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>