Honda Motor (NYSE: HMC) and Tata Motors (NYSE:TTM) are both large-cap auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitabiliy.
Risk and Volatility
Honda Motor has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Tata Motors has a beta of 2.26, suggesting that its share price is 126% more volatile than the S&P 500.
Institutional & Insider Ownership
2.6% of Honda Motor shares are owned by institutional investors. Comparatively, 13.3% of Tata Motors shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares Honda Motor and Tata Motors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Honda Motor pays an annual dividend of $0.75 per share and has a dividend yield of 2.7%. Tata Motors does not pay a dividend. Honda Motor pays out 23.6% of its earnings in the form of a dividend. Honda Motor has raised its dividend for 3 consecutive years.
This is a breakdown of recent recommendations and price targets for Honda Motor and Tata Motors, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Honda Motor currently has a consensus target price of $33.18, indicating a potential upside of 19.96%. Tata Motors has a consensus target price of $48.00, indicating a potential upside of 38.73%. Given Tata Motors’ stronger consensus rating and higher probable upside, analysts clearly believe Tata Motors is more favorable than Honda Motor.
Earnings & Valuation
This table compares Honda Motor and Tata Motors’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Honda Motor||$124.51 billion||0.40||$11.78 billion||$3.18||8.70|
|Tata Motors||$41.96 billion||N/A||$3.71 billion||$1.40||24.71|
Honda Motor has higher revenue and earnings than Tata Motors. Honda Motor is trading at a lower price-to-earnings ratio than Tata Motors, indicating that it is currently the more affordable of the two stocks.
Tata Motors beats Honda Motor on 9 of the 15 factors compared between the two stocks.
About Honda Motor
Honda Motor Co., Ltd. (Honda) develops, manufactures and markets motorcycles, automobiles and power products across the world. The Company’s segments include Motorcycle Business, Automobile business, Financial services business, and Power product and other businesses. The Company produces a range of motorcycles, with engine displacement ranging from the 50 cubic centimeters class to the 1,800 cubic centimeters class. Its automobiles use gasoline engines of three, four or six cylinder, diesel engines, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda offers a range of financial services to its customers and dealers through finance subsidiaries in countries, including Japan, the United States, Canada, the United Kingdom, Germany, Brazil and Thailand. Honda manufactures a range of power products, including general-purpose engines, generators, water pumps, lawn mowers, riding mowers, grass cutters, brush cutters, tillers and snow blowers.
About Tata Motors
Tata Motors Limited is an automobile company. The Company is engaged in manufacture of motor vehicles. The Company is engaged mainly in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the Company. The Company’s segments include automotive operations and all other operations. The Company’s automotive segment operations include all activities relating to the development, design, manufacture, assembly and sale of vehicles, including vehicle financing, as well as sale of related parts and accessories. In the automotive segment, the Company manufactures and sells passenger cars, utility vehicles, light commercial vehicles, and medium and heavy commercial vehicles. The Company’s all other operations segment mainly includes information technology (IT) services, and machine tools and factory automation services. The Company operates in over 160 countries across the world.
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