Critical Review: Honda Motor (HMC) vs. Nissan Motor (NSANY)

Honda Motor (NYSE:HMC) and Nissan Motor (OTCMKTS:NSANY) are both large-cap auto/tires/trucks companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Dividends

Honda Motor pays an annual dividend of $0.38 per share and has a dividend yield of 1.3%. Nissan Motor pays an annual dividend of $0.38 per share and has a dividend yield of 2.1%. Honda Motor pays out 10.5% of its earnings in the form of a dividend. Nissan Motor pays out 10.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Honda Motor has increased its dividend for 4 consecutive years. Nissan Motor is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Honda Motor and Nissan Motor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Honda Motor 7.09% 8.90% 3.75%
Nissan Motor 6.22% 14.67% 4.14%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Honda Motor and Nissan Motor, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Honda Motor 0 2 4 0 2.67
Nissan Motor 0 0 0 0 N/A

Honda Motor currently has a consensus price target of $42.00, indicating a potential upside of 45.13%. Given Honda Motor’s higher probable upside, equities research analysts plainly believe Honda Motor is more favorable than Nissan Motor.

Institutional and Insider Ownership

2.1% of Honda Motor shares are owned by institutional investors. Comparatively, 0.1% of Nissan Motor shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Honda Motor and Nissan Motor’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Honda Motor $138.71 billion 0.38 $9.53 billion $3.62 7.99
Nissan Motor $107.92 billion 0.33 $6.74 billion $3.63 5.01

Honda Motor has higher revenue and earnings than Nissan Motor. Nissan Motor is trading at a lower price-to-earnings ratio than Honda Motor, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Honda Motor has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Nissan Motor has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Summary

Honda Motor beats Nissan Motor on 10 of the 15 factors compared between the two stocks.

About Honda Motor

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power products, and other products worldwide. The company operates through four segments: Motorcycle Business, Automobile Business, Financial Services Business, and Power Product and Other Businesses. The Motorcycle Business segment produces sports models, including trial and moto-cross racing vehicles; business and commuter models; all-terrain vehicles; and side-by-side models. The Automobile Business segment offers passenger cars, light trucks, and mini vehicles, as well as vehicles powered with alternative fuel, such as ethanol, battery electric, and fuel cell vehicles. The Financial Services Business segment provides various financial services, including retail lending and leasing services to customers, as well as other financial services comprising wholesale financing to dealers. The Power Product and Other Businesses segment manufactures and sells various power products consisting of general-purpose engines, generators, water pumps, lawn mowers, riding mowers, robotic mowers, brush cutters, tillers, snow blowers, outboard marine engines, and walking assist devices, as well as portable battery inverter power sources. This segment also offers HondaJet aircraft. The company also sells spare parts; and provides after-sale services through retail dealers directly, as well as through overseas operations, independent distributors, and licensees. Honda Motor Co., Ltd. sells its products through independent retail dealers. Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.

About Nissan Motor

Nissan Motor Co., Ltd. manufactures and sells vehicles and automotive parts worldwide. It sells vehicles under the Nissan, Infiniti, and Datsun brands. The company offers vehicle and vehicle parts; engines, manual transmissions, and other related component parts; automotive parts; industrial equipment engines and other related component parts, and axles; specially equipped vehicles; motorsports engines; and rechargeable lithium-ion batteries. It also provides financial services, auto credit and car leasing, card business, insurance agency, and inventory finance, as well as engages in exterior and interior design for automobiles, and operations and consulting related to the analysis and assay of raw materials. In addition, the company engages in the provision of travel, environmental and engineering, production technology center, and facility services; ground and vehicle management, and information and logistics businesses; design, vehicle drawings and experiments, other engineering, electronic devices, and electronic equipment businesses; export and import of auto components and materials; and real estate businesses. Further, it is involved in promotion of motorsports, including race and motorsports event planning, and vehicle remodeling; sale of car parts and accessories for motorsports; and demonstration test and commercialization study for second-life use of lithium-ion batteries for automotive use. Additionally, the company imports and sells Renault vehicles and parts; and manages and plans professional soccer team and soccer schools. The company was founded in 1933 and is headquartered in Yokohama, Japan.

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