Lawmakers face a deadline of less than three weeks to raise the debt ceiling. Failure can lead to default, followed by a large market liquidation and economic downturn. When the country was on the brink of such an issue in 2011, the The S&P 500 fell more than 18%. Besides, companies raise prices or intend to do it quickly, as input prices rise due to continued supply chain bottlenecks.
Historically, value stocks have outperformed growth stocks in the face of market volatility and rising prices. The SPDR Portfolio S&P 500 Value ETF (SPY) has gained 31.2% over the past year, outperforming the SPDR Portfolio S&P 500 Growth ETF (SPY) 29.2% yield.
So, it might make sense to invest in fundamentally strong shares of Hitachi, Ltd. (HTHIY), Honda Motor Co., Ltd. (HMC), Penske Automotive Group, Inc. (PAG) and Konica Minolta, Inc. (KNCAY) which appear to be undervalued at their current price levels.
Hitachi, Ltd. (HTHIY)
HTHIY is a multinational corporation based in Tokyo, Japan. The company provides technology and smart life solutions globally, with a portfolio of software, IoT, ATM and storage systems services.
On September 28, HTHIY and its recently acquired subsidiary GlobalLogic, a digital engineering services company, launched a collaborative hub to promote digital transformation services in the Lumada Innovation Hub in Tokyo. Given the growing demand for digital transformation, this launch is expected to create a new revenue stream for HTHIY.
On September 21, the Egyptian Electricity Transmission Company (EETC) appointed Hitachi ABB Power Grids to provide power management systems to establish an area control center in northern Egypt. The collaboration demonstrates the expansion of HTHIY’s international operations.
In terms of GAAP futures P / E, HTHIY is currently trading at 8.55x, which is 60.8% below the industry average of 21.82x. Its EV / futures multiple of 0.89 is 53.2% lower than the industry average of 1.89.
For the three months ended June 30, HTHIY’s revenue increased 48.5% year-on-year to $ 21.33 billion. The company’s gross profit rose 39% from the previous year quarter to $ 5.20 billion. Adjusted operating income was $ 1.18 billion, up 123.5% from the same period last year.
The consensus estimate of EPS of $ 14.45 for the current year (fiscal 2022) indicates a 47.4% year-over-year increase. Likewise, the consensus estimate of revenue of $ 90 billion for the current year reflects a 9.3% increase from the previous year. The stock has gained 74.2% in the past year and 53.1% year-to-date to close yesterday’s trading session at $ 121.52.
HTHIY’s strong fundamentals are reflected in its POWR odds. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
HTHIY has an A rating for value and a B rating for growth, stability and sentiment. In the 92-stock Industrial equipment industry, it is ranked # 4. This industry is classified B. Click here to see additional POWR ratings for HTHIY (momentum and quality).
Honda Motor Co., Ltd. (HMC)
HMC is a producer, manufacturer and distributor of motorcycles, automobiles, electrical products, and aircraft and jet engines. It also sells spare parts and provides after-sales service. The company is headquartered in Tokyo, Japan.
On September 24, HMC collaborated with Alphabet Inc. (GOOGL) for using GOOGL’s connected vehicle services in HMC’s new car model in the hope of improving the user experience. The collaboration could create new channels of value for HMC by leveraging GOOGL’s expertise in innovative technologies.
On September 21, HMC launched its new second-generation Honda BR-V model, with a set of new features, for Indonesian customers. Commenting on the launch, Masayuki Igarashi, Regional Operations Manager (Asia and Oceania), HMC, said, âIndonesia is one of Honda’s most important markets in Asia and Oceania for production and sales. . Therefore, we keep developing new models and services to meet the demand of customers all over the world, including Indonesia. The all-new Honda BR-V has been developed to define a new generation of style, comfort and performance for the driving pleasure of Indonesian customers.
HMC front Price / Sales the multiple of 0.39 is 69.2% lower than the industry average of 1.26. In terms of forward price / cash flow, HMC is currently trading at 3.66x, which is 72.1% below the industry average of 13.13x.
In the first fiscal quarter ended June 30, HMC’s revenue increased 68.7% year-over-year to 3.58 trillion yen ($ 32.18 billion). The company’s profit for the period was 237.72 billion yen ($ 2.13 billion) while EPS attributable to owners of the parent company was 128.87 yen, both in strong increase from their negative values ââa year ago.
Street’s EPS estimate for the current year (FY2022) of $ 3.87 reflects an 11.3% year-over-year increase, while Street’s revenue estimate of 139 .06 billion dollars for the current year indicates an increase of 391.6% year over year. Additionally, HMC has an impressive track record of revenue surprises as it has exceeded consensus revenue estimates in each of the past four quarters. HMC stock has gained 31.9% in the past year and 10.4% year-to-date to close yesterday’s trading session at $ 31.20.
It’s no surprise that HMC has an overall rating of B, which translates to Buy into our proprietary POWR rating system. The stock also has a value rating of A and a stability and sentiment rating of B. It is ranked # 2 out of the 63 stocks in the stock market. Automobile and vehicle manufacturers industry.
To see additional POWR ratings for Growth, Dynamics, and Quality, Click here.
Penske Automotive Group, Inc. (PAG)
PAG is a transportation services company that operates practically through four segments – Retail Automotive; Retail commercial truck; Other; and non-automotive investments. The company sells new and used vehicles and also operates truck dealerships.
On June 4, PAG announced its expansion to Charlotte, North Carolina, following the acquisition of the Mercedes-Benz dealership in South Charlotte. PAG expects to add $ 700 million to its annual revenue through this acquisition.
In July, PAG, in collaboration with Cox Automotive, Inc., developed a fully online retail platform for used vehicles. The platform is expected to benefit PAG through transparent and easy transactions, improving the customer experience.
In terms of EV / forward sales, PAG is currently trading at 0.58x, which is 60.4% below the industry average of 1.46x. Its forward price / sell multiple of 0.33 is 73.7% lower than the industry average of 1.26.
In the fiscal second quarter ended June 30, PAG’s revenue grew 91.4% year-over-year to $ 6.99 billion. Its gross profit rose 113.9% from the previous year quarter to $ 1.18 billion. Adjusted earnings from continuing operations increased 700.4% year-over-year to $ 360.20 million, while Adjusted EPS from continuing operations was $ 4.47, indicating an increase of 698.2 % compared to the same period last year.
The street EPS estimate of $ 2.89 for the next quarter (ending December 2021) reflects a 16.1% year-over-year increase. Likewise, the consensus estimate of revenue of $ 6.58 billion for the next quarter indicates an increase of 13.2% over the quarters of the previous year. Additionally, PAG has beaten consensus EPS estimates in each of the past four quarters, which is impressive.
Over the past year, PAG gained 117.6% to close yesterday’s trading session at $ 104.83. The title has gained 76.5% since the start of the year.
PAG’s POWR ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system.
PAG has a Value rating of A and a Growth, Momentum and Sentiment rating of B. It is ranked # 3 out of the 25 shares in the group. Car dealers and rentals industry. This industry is classified B. To see additional POWR ratings for stability and quality for PAG, Click here.
Konica Minolta, Inc. (KNCAY)
KNCAY is a multinational technology company based in Tokyo, Japan. The company sells multifunctional devices, digital printing systems and other related consumables. In addition, the company provides IT and printing solutions and services.
In terms of EV / futures sales, KNCAY is currently trading at 0.64x, which is 84.2% below the industry average of 4.04x. Its futures price / sell multiple of 0.31 is 92.4% lower than the industry average of 4.09.
For the three months ended June 30, KNCAY’s revenue increased 32.7% year-on-year to 229.86 billion yen ($ 2.06 billion). Gross profit improved 41.3% from the previous year quarter to 101.29 billion yen ($ 909.56 million). Profit attributable to company owners and EPS was 978 million yen (8.78 million yen) and 1.98 yen respectively, up sharply from their negative values ââa year ago. year.
Analysts expect its revenue to grow 5.9% year-on-year in the current quarter (end of September 2021) to $ 2.14 billion. Additionally, KNCAY has beaten consensus revenue estimates in three of the past four quarters, which is impressive. KNCAY stock has gained 91.7% in the last year and 8.5% in the last month.
KNCAY has an overall rating of B which translates to Buy in our rating system. The stock has an A rating for value and a B rating for growth, stability and quality. KNCAY is ranked # 16 in the industrial equipment industry.
In addition to the POWR ratings we have shown above, we can see the KNCAY ratings for Momentum and Sentiment here.
HTHIY stock was trading at $ 118.78 per share on Wednesday afternoon, down $ 2.74 (-2.25%). Year-to-date, HTHIY has gained 50.86%, compared to a 17.40% increase in the benchmark S&P 500 over the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s a passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach he takes while advising investors in his articles. Following…