This year, increasing supply chain disruptions and a global shortage of semiconductor chips caused production cuts and tight inventories for automakers. In addition, rising prices kept less affluent buyers away from new cars. As a result, US light vehicles revenue decreased by 17% year-on-year last month.
While investor concerns about the ongoing shortage of chips, production interruptions and rising prices have recently pushed manufacturing inventories into a correction, growing investment and interest in autonomous and electric vehicles make the industry’s prospects rosy. The North American auto market is expected to grow by a 6.6% CAGR to $970.23 billion by 2027.
Against this background, we think it may be wise to avoid the dip in high-quality auto manufacturing stock Honda Motor Co., Ltd. (HMC), Nissan Motor Co., Ltd. (NSANY), Stellantis NV (STLA) and Mazda Motor. Corporation (MZDAY).
Click here to view our Automotive Industry Report for 2022
Honda Motor Co., Ltd. †HMC†
Headquartered in Tokyo, Japan, HMC develops, manufactures and distributes motorcycles, automobiles and electrical products worldwide. The company also sells spare parts and provides after-sales service through direct retailers and independent distributors and licensees.
HMC’s Chinese subsidiary, Honda Motor (China) Investment Co., Ltd. (HMCI), announced that Dongfeng Honda Automobile Co., Ltd., a Chinese automobile manufacturing company and a joint venture between HMC and Dongfeng Motor Group, would begin sales of the all-new model e:NS1 electric vehicle (EV) on 26 April 2022. The all-new e:NS1 and e:NP1 will feature the latest connectivity technologies available in China, including Honda CONNECT 3.0, the next-generation connected technology developed exclusively for EVs, and a large 15.1-inch display audio, and provides the Driver Monitoring Camera (DMC), which aids safe driving by detecting potentially dangerous behavior. These EVs should see high demand and broad market reach in the coming months.
As of December 31, 2021, the company had ¥2.69 trillion ($20.65 billion) in cash and cash equivalents† Analysts expect HMC’s earnings per share to grow 17.4% year over year to $3.22 for fiscal year 2023, ending March 31, 2023. It surpassed The Street’s revenue estimates in three of its lagging four quarters. The consensus revenue estimate of $127.48 billion for the same fiscal year represents a 14.3% increase from the same period last year.
The stock’s 0.74x forward EV/Sales is 30.8% lower than the 1.07x industry average. In terms of forward price/sell, HMC is currently trading at 0.39x, which is 55.1% below the 0.88x industry average. Over the past week, the stock has fallen 2.7% in price, closing yesterday’s trading session at $25.63.
HMC’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which is equivalent to Buy in our proprietary rating system. The POWR ratings are calculated by taking into account 118 different factors, with each factor being optimally weighted.
It has an A rating for Value and a B rating for Stability, Sentiment and Quality. Click here to see additional assessments for HMC’s growth and momentum. HMC ranks 6 out of 69 stocks in the auto and vehicle manufacturing industry.
Nissan Motor Co., Ltd. †NSANY†
NSANY, headquartered in Yokohama, Japan, manufactures and markets automobiles and parts and provides financial sales services around the world. The company participates in motorsports promotion, including racing and motorsports event planning, vehicle conversions, sales of auto parts and accessories for motorsports, and demonstration testing and commercialization studies for second-life lithium-ion batteries for motorsports. car use.
On April 25, 2022, NSANY announced a new driver assistance technology (currently in development) that uses highly accurate, real-time information about the vehicle’s environment to prevent collisions. Developed in collaboration with other innovative companies, this technology combines information from next-generation high-performance LIDAR, radar and cameras, enabling vehicles to immediately analyze a situation and automatically perform the required collision avoidance operations. NSANY should witness increased demand for this technology after its launch.
NSANY’s gross profit for its fiscal 2021 third quarter ended March 31, 2022, increased 5.1% year-over-year to 344.34 billion ($2.65 billion). The company’s operating income came in at ¥52.16 billion ($401.23 million), representing a 92.3% increase over the same period last year. Net profit was 37.32 trillion ($287.09 million) for the quarter, compared to a loss of ¥32.41 billion ($249.34 million) in the same period last year. The company had ¥1.79 trillion ($13.76 billion) in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s earnings per share to be $1.10 for fiscal year 2023, ending March 31, 2023, up 11.7% from the same period last year. The consensus revenue estimate of $77.76 billion for the same fiscal year represents a 15.8% year-over-year improvement.
The stock’s 0.89x forward EV/Sales is 17.4% lower than the 1.07x industry average. In terms of forward price/sell, NSANY is currently trading at 0.23x, which is 74.2% lower than the 0.88x industry average. Over the past week, the stock is down 1.1% in price, closing yesterday’s trading session at $7.79.
NSANY’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which is equivalent to Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth. Click here to see the additional ratings for NSANY (Sentiment, Momentum, Quality and Stability). NSANY ranks 11th in the auto and vehicle manufacturing industry.
Stellantis NV (STLA†
STLA, based in the Netherlands, designs, manufactures and markets passenger cars, pickup trucks, SUVs and light commercial vehicles worldwide. The company also manufactures metallurgical products and manufacturing systems for the automotive industry and provides retail and dealer financing, leasing and rental services. It sells its products directly, as well as through distributors and dealers.
On May 3, 2022, Free2move, a joint venture between STLA and the Engie EPS business of French utility Engie SA, announced that it had agreed to acquire the German-based car-sharing company Share Now, a joint venture formed by Daimler AGs ( DDAIF) Mercedes-Benz Mobility Group and BMW Group (BMWYY). The acquisition will position Free2move as a leader in carsharing, add 14 new European cities to Free2move’s seven existing mobility hubs in the United States and Europe, and enhance technology expertise to meet customers’ diverse mobility needs. This is also an important step towards meeting STLA’s Dare Forward 2030 target of growing its profitable mobility service.
For the full fiscal year 2021, ending December 31, 2021, STLA’s net revenue grew 13.6% year over year to €152.12 billion ($160.75 billion). The company’s pro forma adjusted operating income came in at €18.01 billion ($19.03 billion), up 95.3% from the same period last year. Pro forma net profit was €14.34 billion ($15.15 billion), an increase of 210.7% from the same period last year. STLA’s pro forma EPS came in at €4.55, indicating a 218.2% year-over-year improvement. The company had €49.63 billion in cash and cash equivalents as of December 31, 2021.
Analysts expect the share’s earnings per share to improve 16.3% year over year to $5 for fiscal 2022 ending Dec. 31, 2022. The consensus revenue estimate of $177.79 billion for the same fiscal year represents a increase of 3.4% compared to the same period last year. †
STLA’s 0.14x forward EV/Sales is 86.8% lower than the 1.07x industry average. In terms of forward price/sell, STLA is currently trading at 0.24x, which is 72.8% below the 0.88x industry average.
Over the past week, the stock is up 1.7% in price to close out yesterday’s trading session at $13.65.
STLA’s POWR Ratings reflect the solid outlook. The stock has an overall B rating, which is equivalent to Buy in our proprietary rating system.
It has an A rating for Value and a B rating for Feel and Quality. In addition to the POWR Ratings numbers we just highlighted, you can check out the ratings for STLA’s stability, growth and momentum here. STLA ranks third in the auto and vehicle manufacturing industry.
Mazda Motor Corporation (MZDAY†
MZDAY, headquartered in Hiroshima, Japan, manufactures and markets passenger cars, commercial vehicles and related auto parts internationally. The company’s main products are four-wheel vehicles, petrol piston engines, diesel engines and automatic and manual transmissions for vehicles. It also distributes used cars and special purpose vehicles, car inspection and body building.
On March 8, 2022, MZDAY’s Mazda Motor Europe company unveiled its new crossover SUV, the CX-60, the first of Mazda’s Large Product Group models, offering greater driving pleasure, environmental and safety performance. This mid-sized two-row SUV is equipped with e-Skyactiv PHEV, MZDAY’s first plug-in hybrid system with a 2.5 liter four-cylinder in-line petrol engine and an electric motor. MZDAY was expected to begin production of the CX-60 on March 11, 2022 at Hofu Plant No. 2 in Yamaguchi Prefecture. 2023. This should help MZDAY generate high demand and continued growth.
MZDAY’s operating income for the third quarter of fiscal year 2022, ending December 31, 2021, increased 14.7% year-over-year to 23.92 billion ($184.32 million). The company had ¥767.92 billion ($5.92 billion) in cash and cash equivalents as of December 31, 2022.
Analysts expect the stock’s revenue to improve 18.2% year over year to $28.56 billion for fiscal year 2023, ending March 31, 2023. The stock’s 0.23x future EV/sales is 78.3 % lower than the 1.07x industry average. In terms of forward price/sell, MZDAY is currently trading at 0.19x, which is 78.2% below the 0.88x industry average. Over the past week, the stock is up 1.4% in price and yesterday’s trading session ended at $3.60.
MZDAY’s strong fundamentals are reflected in its POWR ratings. It has an overall B rating, which is equivalent to Buy in our proprietary rating system.
The share has an A rating for Value and a B rating for Quality and Stability. Click here to see the additional ratings for MZDAY (Growth, Sentiment and Momentum). The stock ranks number 13 in the auto and vehicle manufacturing industry.
Click here to view our Automotive Industry Report for 2022
HMC shares traded at $25.02 per share on Wednesday afternoon, down $0.61 (-2.38%). Year-to-date, HMC is down -12.06%, compared to a -16.17% rise in the benchmark S&P 500 index over the same period.
About the author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She has a passion for educating investors so that they can find success in the stock market. More…