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Honda (HMC) to Report Q4 Earnings: What's in the Offing?

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Honda (HMC - Free Report) is slated to release fourth-quarter fiscal 2021 results on May 14. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 43 cents per share on revenues of $33.12 billion.

This Japanese auto giant delivered higher-than-anticipated earnings in the last reported quarter on solid contribution from the Automobile and Financial Services segments.

Over the trailing four quarters, the company missed estimates on one occasion and surpassed in the remaining three, the average surprise being 29.13%.

Trend in Estimate Revisions   

The Zacks Consensus Estimate for Honda’s fiscal fourth-quarter earnings per share moved seven cents down to 43 cents in the past 60 days. Nonetheless, this compares favorably with the year-ago quarter’s loss of 16 cents per share, indicating a whopping 368.8% jump, year on year. The Zacks Consensus Estimate for quarterly revenues also suggests a year-over-year rise of 4.31%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Honda this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Honda has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Honda, peers of which include Toyota (TM - Free Report) , Nissan Motor (NSANY - Free Report) and Volkswagen AG (VWAGY - Free Report) , currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

The auto industry is influenced by a number of strong macroeconomic factors and is highly sensitive to overall strength of the economy. With the economy in an unhealthy state, and new Covid-19 strains prolonging infections, customers are likely to have put discretionary expenses on hold. Consequently, the quarterly performance of Honda might have been adversely impacted.

Evidently, for the quarter in discussion, vehicle sales in Japanese market summed 181,842 units, lower than the 187,095 units sold in the prior-year quarter, which is likely to have hurt the automaker’s quarterly results.

Moreover, the company’s elevated capital expenditure on advanced technologies and alternative fuels for the development of electric and autonomous vehicles are likely to have dented the fiscal fourth-quarter margins. Also, the company is battling the global semiconductor supply deficit, which is hindering its business operations and forcing it to idle production lines across the world. This is likely to have eroded the automaker’s fiscal fourth-quarter performance.

Nonetheless, for the March-end quarter, the vehicle sales in the American market totaled 347,091 units, up 16.2% year on year. This is likely to have provided some respite to the automaker during the quarter.

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