Honda Motor (NYSE:HMC) vs. Rev Group (REVG) Critical Analysis

Rev Group (NASDAQ: REVG) and Honda Motor (NYSE:HMC) are both cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for Rev Group and Honda Motor, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rev Group 0 3 7 0 2.70
Honda Motor 0 3 2 0 2.40

Rev Group presently has a consensus target price of $32.38, suggesting a potential upside of 29.09%. Honda Motor has a consensus target price of $33.18, suggesting a potential upside of 20.39%. Given Rev Group’s stronger consensus rating and higher probable upside, analysts plainly believe Rev Group is more favorable than Honda Motor.

Profitability

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

Net Margins Return on Equity Return on Assets
Rev Group 1.25% 6.72% 2.58%
Honda Motor 4.58% 8.57% 3.44%

Earnings and Valuation

This table compares Rev Group and Honda Motor’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rev Group $2.06 billion 0.78 $94.96 million N/A N/A
Honda Motor $128.93 billion 0.39 $12.12 billion $3.28 8.40

Honda Motor has higher revenue and earnings than Rev Group.

Dividends

Honda Motor pays an annual dividend of $0.75 per share and has a dividend yield of 2.7%. Rev Group does not pay a dividend. Honda Motor pays out 22.9% of its earnings in the form of a dividend. Rev Group has increased its dividend for 3 consecutive years.

Insider & Institutional Ownership

2.6% of Honda Motor shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

About Rev Group

REV Group, Inc. is a designer, manufacturer and distributor of specialty vehicles and related aftermarket parts and services. The Company operates through three segments: Fire & Emergency, Commercial and Recreation. The Company provides customized vehicle solutions for applications, including essential needs (ambulances, fire apparatus, school buses, mobility vans and municipal transit buses), industrial and commercial (terminal trucks, cut-away buses and street sweepers) and consumer leisure (recreational vehicles (RVs) and luxury buses). The Fire & Emergency segment manufactures a range of fire apparatus and ambulance products. The Commercial segment manufactures transit and shuttle buses, Type A school buses, mobility vans, and other specialty vehicles, including sweepers and terminal trucks distributed both through dealers and direct. The Recreation segment manufactures motorized RV products sold to brand-loyal, repeat customers who purchase through dealers.

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.

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