Honda Motor (NYSE: HMC) and Adient PLC (NYSE:ADNT) are both mid-cap cyclical consumer goods & services companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Honda Motor and Adient PLC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Honda Motor 0 4 2 0 2.33
Adient PLC 1 4 3 0 2.25

Honda Motor presently has a consensus price target of $36.36, suggesting a potential upside of 9.78%. Adient PLC has a consensus price target of $72.13, suggesting a potential downside of 7.37%. Given Honda Motor’s stronger consensus rating and higher probable upside, research analysts plainly believe Honda Motor is more favorable than Adient PLC.

Profitability

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

Net Margins Return on Equity Return on Assets
Honda Motor 4.38% 8.12% 3.28%
Adient PLC 5.47% 23.74% 7.58%

Insider and Institutional Ownership

2.5% of Honda Motor shares are held by institutional investors. Comparatively, 93.8% of Adient PLC shares are held by institutional investors. 0.1% of Adient PLC shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Honda Motor $124.78 billion 0.48 $5.73 billion $3.18 10.42
Adient PLC $16.21 billion 0.45 $877.00 million $9.35 8.33

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

Dividends

Honda Motor pays an annual dividend of $0.38 per share and has a dividend yield of 1.1%. Adient PLC pays an annual dividend of $1.10 per share and has a dividend yield of 1.4%. Honda Motor pays out 11.9% of its earnings in the form of a dividend. Adient PLC pays out 11.8% 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 3 consecutive years. Adient PLC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Adient PLC beats Honda Motor on 9 of the 16 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 Adient PLC

Adient plc, formerly Adient Limited, is an automotive seating supplier. The Company designs, manufactures and markets a range of seating systems and components for passenger cars, commercial vehicles, and light trucks, including vans, pick-up trucks, and sport/crossover utility vehicles. The Company operates through two segments: Seating and Interiors. The Seating segment produces automotive seat metal structures, and mechanisms, foam, trim, fabric and complete seat systems. The Interiors segment produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products. The Company also supplies various seating systems to the international motorsports industry through its RECARO brand of products. It operates approximately 230 manufacturing or assembly facilities, with operations in over 30 countries. Its technologies focus on offering automotive seating solutions in a range of areas, including frames, armrests and fabrics.

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