Curious whether Honda Motor is a bargain, overpriced, or hiding true long-term value? You are not alone. Many investors are watching this stock closely for clues about its real worth.
Honda’s share price has been on a wild ride lately, climbing 20.5% over the last year and 91.4% in five years, but dipping slightly by 1.8% in the past week.
Big moves have caught attention amid recent headlines about Honda’s aggressive push into electric vehicles and strategic global partnerships. News highlighting new model launches and ambitious sustainability goals has spurred speculation that Honda is positioning itself for future growth.
Honda currently earns a 4 out of 6 on our quick valuation score, suggesting it could be undervalued on several key metrics. Up ahead, we will break down the details of those methods and introduce an even better way to judge if the stock is truly a good buy.
Find out why Honda Motor’s 20.5% return over the last year is lagging behind its peers.
The Discounted Cash Flow (DCF) model estimates the true value of a stock by projecting its future cash flows and discounting them back to today’s value. This approach gives investors a sense of what a company is fundamentally worth, beyond the daily fluctuations of the stock market.
For Honda Motor, the current Free Cash Flow (FCF) stands at -¥154 Billion, indicating the company experienced negative cash flow over the latest twelve months. Analysts provide cash flow projections for up to five years, with longer-term figures extrapolated. Honda is expected to return to positive territory, with projected FCF reaching ¥889 Billion in 2030. The DCF model used in this analysis, specifically the 2 Stage Free Cash Flow to Equity approach, captures these anticipated upswings and long-term trends.
Based on these projections, the DCF model estimates Honda’s intrinsic value at ¥1,845 per share. This represents a 15.6% discount compared to the current market price, suggesting the stock is undervalued on a cash flow basis.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Honda Motor is undervalued by 15.6%. Track this in your watchlist or portfolio, or discover 879 more undervalued stocks based on cash flows.
7267 Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Honda Motor.
The Price-to-Earnings (PE) ratio is a popular method for valuing profitable companies such as Honda Motor. It provides a quick way to compare how much investors are paying for each yen of earnings, making it especially useful for established firms with consistent profits.
Growth expectations and risk play a big role in assessing what constitutes a fair PE ratio. Companies expected to grow faster or with lower risk generally justify higher PE ratios, while uncertainty or slow growth warrants a lower ratio.
Honda currently trades at 9.28x, considerably below the automotive industry average of 18.42x and also below the peer average of 10.74x. At first glance, this points to a potential bargain, but benchmarks like industry and peer averages do not always consider what makes Honda unique.
This is where Simply Wall St’s Fair Ratio comes in. This proprietary metric calculates a tailored PE ratio for Honda based on factors such as earnings growth, sector outlook, profit margins, market cap, and company-specific risks. By weighing these variables, the Fair Ratio provides a more nuanced and individualized valuation benchmark than broad industry comparisons.
Honda’s Fair PE Ratio is 17.42x, well above its current multiple of 9.28x. This comparison suggests that the stock may be significantly undervalued relative to its fundamentals and future potential.
Result: UNDERVALUED
TSE:7267 PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1406 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your own story or perspective on a company, connecting your assumptions about Honda Motor’s future revenue, earnings, and margins to a justified fair value. This makes the numbers meaningful and personal. Narratives bridge Honda’s business story to financial forecasts and, ultimately, to whether a stock is cheap or expensive. This empowers you to move beyond one-size-fits-all comparisons. On Simply Wall St’s Community page, creating or browsing Narratives is easy and accessible, with millions of investors using them to align their decisions with both quantitative data and real-world developments.
By building a Narrative, you can compare your estimated fair value for Honda to the current market price and decide when to buy or sell. Narratives update dynamically as new news or earnings emerge, so you always have the latest context for your decision. For example, one investor might focus on Honda’s expanding motorcycle sales and strategic partnerships, arriving at a robust fair value near ¥1,900. Another might highlight EV challenges and competitive risks, estimating value much lower, around ¥1,400. Narratives let you see these different perspectives, so you can invest with clarity and confidence.
Do you think there’s more to the story for Honda Motor? Head over to our Community to see what others are saying!
TSE:7267 Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 7267.T.
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