Head-To-Head Comparison: Rev Group (REVG) versus Honda Motor (HMC)

Honda Motor (NYSE: HMC) and Rev Group (NYSE:REVG) are both mid-cap auto/tires/trucks companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Profitability

This table compares Honda Motor and Rev Group’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%
Rev Group 1.38% 12.17% 5.09%

Institutional & Insider Ownership

2.4% of Honda Motor shares are held by institutional investors. Comparatively, 25.0% of Rev Group shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Honda Motor $124.78 billion 0.52 $5.73 billion $3.17 11.33
Rev Group $2.27 billion 0.90 $31.37 million $0.42 75.45

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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Honda Motor 0 4 2 0 2.33
Rev Group 0 3 8 0 2.73

Honda Motor presently has a consensus target price of $36.36, indicating a potential upside of 1.20%. Rev Group has a consensus target price of $32.78, indicating a potential upside of 3.43%. Given Rev Group’s stronger consensus rating and higher probable upside, analysts clearly believe Rev Group is more favorable than Honda Motor.

Dividends

Honda Motor pays an annual dividend of $0.37 per share and has a dividend yield of 1.0%. Rev Group pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. Honda Motor pays out 11.7% of its earnings in the form of a dividend. Rev Group pays out 142.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rev Group has increased its dividend for 4 consecutive years. Rev Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Rev Group beats Honda Motor on 10 of the 15 factors compared between the two stocks.

Honda Motor Company Profile

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.

Rev Group Company Profile

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.

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