Honda Motor posted a surge in earnings for its fiscal first quarter Wednesday, boosted by recovering U.S. sales and favorable currency movements. Honda stock tested a buy point after a big rally this year.
Honda Earnings
The Japanese automaker's operating profit reached 394.4 billion yen ($2.76 billion) in the three months through June, easily beating estimates.
Sales grew 44.7% in the key U.S. market in Q2 as the chip shortage eased. But Honda's sales fell 5% in China where it is "still operating amid some restrictions from semiconductors," the company said.
On a per-share basis, Honda posted earnings of $1.53 on revenue of $32.309 billion, FactSet shows.
Year over year, Honda earnings rebounded 133% and sales bounced 12%.
Honda maintained its outlook for a 1 trillion yen operating profit for the full year. It may update guidance, including the benefits from a weakening yen, around November, when Q2 results are due.
During Q2, Honda sold more than 110,000 new vehicles in the U.S. market in each month of the quarter.
The automaker also said both its passenger cars and light trucks did well, although "we now have some industrywide transportation issues to overcome."
The company also announced a 3-for-1 stock split, effective Oct. 1. Honda trades in American Depositary Receipts (ADRs).
Honda Stock
Shares rose 2.7% to 31.99 in Wednesday's stock market action. The move in strong volume sent Honda stock past a 32.06 buy point in a cup-with-handle base intraday, though it closed below the entry.
Japanese rival Toyota Motor fell 1.8% Wednesday. Toyota stock broke out of a cup base following its Aug. 1 earnings report. It is now back below the 169.07 buy point, but there's no sell signal so far.
Investors have warmed to Japan's big automaker stocks this year, partly on currency issues, but also on what some analysts say was a delayed reaction to the companies' commitment to electric vehicle and alternative fuel technologies.
In 2021, Honda announced plans to make only EVs or vehicles powered by hydrogen fuel cells by 2040. Last year, the company set out a 2030 goal to produce 2 million EVs and offer 30 electric models. Toyota launched new battery and hydrogen initiatives in June.
Honda shares are up 40% year to date. Toyota has a 22.5% gain.
GM's Latest Electric Cadillac: Escalade IQ
Meanwhile, General Motors on Wednesday revealed the Cadillac Escalade IQ, the third all-electric vehicle from the luxury brand after the Lyriq and Celestiq. The new electric SUV boasts an estimated range of 450 miles and a 55-inch screen stretched across its dashboard.
The Escalade IQ is set to arrive in late 2024, starting at around $130,000. In 2021, GM announced its Cadillac brand was going all-electric.
GM stock fell 1.6% Wednesday, back below the 50- and 200 day averages.
