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Are Investors Undervaluing Honda Motor Co. (HMC) Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Honda Motor Co. (HMC - Free Report) . HMC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 7.77. This compares to its industry's average Forward P/E of 7.79. HMC's Forward P/E has been as high as 8.60 and as low as 6.05, with a median of 7.11, all within the past year.

Investors will also notice that HMC has a PEG ratio of 0.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HMC's PEG compares to its industry's average PEG of 0.65. Over the past 52 weeks, HMC's PEG has been as high as 1.59 and as low as 0.44, with a median of 0.64.

We should also highlight that HMC has a P/B ratio of 0.62. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.69. Within the past 52 weeks, HMC's P/B has been as high as 0.62 and as low as 0.43, with a median of 0.50.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HMC has a P/S ratio of 0.44. This compares to its industry's average P/S of 0.67.

Finally, we should also recognize that HMC has a P/CF ratio of 4.94. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.18. Over the past year, HMC's P/CF has been as high as 4.94 and as low as 3.37, with a median of 3.92.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Honda Motor Co. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HMC feels like a great value stock at the moment.


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