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Why Honda Motor (HMC) Outpaced the Stock Market Today

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In the latest market close, Honda Motor (HMC - Free Report) reached $30.19, with a +1.27% movement compared to the previous day. The stock's change was more than the S&P 500's daily gain of 0.59%. On the other hand, the Dow registered a gain of 0.68%, and the technology-centric Nasdaq increased by 0.66%.

Shares of the automaker witnessed a loss of 5.6% over the previous month, trailing the performance of the Auto-Tires-Trucks sector with its gain of 3.54% and the S&P 500's gain of 5.16%.

The investment community will be closely monitoring the performance of Honda Motor in its forthcoming earnings report. In that report, analysts expect Honda Motor to post earnings of $0.78 per share. This would mark a year-over-year decline of 23.53%. Our most recent consensus estimate is calling for quarterly revenue of $37.68 billion, up 19.76% from the year-ago period.

For the full year, the Zacks Consensus Estimates are projecting earnings of $4 per share and revenue of $143.49 billion, which would represent changes of +32.01% and +14.79%, respectively, from the prior year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Honda Motor. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 3.32% decrease. Honda Motor is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Honda Motor has a Forward P/E ratio of 7.46 right now. Its industry sports an average Forward P/E of 6.57, so one might conclude that Honda Motor is trading at a premium comparatively.

Meanwhile, HMC's PEG ratio is currently 0.35. 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. Automotive - Foreign stocks are, on average, holding a PEG ratio of 0.37 based on yesterday's closing prices.

The Automotive - Foreign industry is part of the Auto-Tires-Trucks sector. With its current Zacks Industry Rank of 39, this industry ranks in the top 16% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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