Comprehensive Stock Comparison
Compare Toyota Motor Corporation (TM) vs Honda Motor Co., Ltd. (HMC) Stock
Analyze side-by-side fundamentals, valuation, growth, and profitability to decide which stock is the better buy.
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Quick Verdict
| Category | Winner | Why |
|---|---|---|
| Growth | TM | 6.5% revenue growth vs HMC's 6.2% |
| Value | TM | PEG 0.00 vs 0.01 |
| Quality / Margins | TM | 9.4% net margin vs HMC's 2.3% |
| Stability / Safety | HMC | Beta 0.83 vs TM's 0.93, lower leverage |
| Dividends | HMC | 4.7% yield, 4-year raise streak, vs TM's 2.3% |
| Momentum (1Y) | TM | +36.7% vs HMC's +13.1% |
| Efficiency (ROA) | TM | 4.7% ROA vs HMC's 1.5%, ROIC 5.6% vs 5.9% |
Who Each Stock Is For
Income & stability
Growth exposure
Long-term compounding (10Y)
Sleep-well-at-night portfolio
Valuation efficiency (growth/$)
Defensive / Recession hedge
Business Model
What each company does and how it makes money
Toyota is one of the world's largest automakers, manufacturing and selling vehicles across nearly every segment — from compact cars to luxury sedans and trucks. It generates most of its revenue from automotive sales (around 90%), supplemented by financial services (about 8%) that provide financing and leasing to customers. The company's key advantage is its legendary manufacturing efficiency — particularly the Toyota Production System — which delivers industry-leading quality and cost control while pioneering hybrid technology with its Prius platform.
Honda is a global automotive and mobility company that manufactures and sells motorcycles, automobiles, and power products worldwide. It generates revenue primarily from vehicle sales—with automobiles contributing roughly 75% of revenue and motorcycles around 15%—supplemented by financial services and power equipment. Honda's competitive advantage lies in its engineering excellence and brand reputation for reliability, particularly in fuel-efficient engines and motorcycle technology.
Revenue Breakdown by Segment
How each company's revenue is distributed across its business units
Financial Metrics Comparison
Side-by-side fundamentals across 2 stocks. BestLagging
Financial Scorecard
TM leads in 2 of 6 categories (Financial Metrics, Total Returns). HMC leads in 2 (Valuation Metrics, Analyst Outlook). 2 tied.
Financial Metrics (TTM)
TM is the larger business by revenue, generating $49.39T annually — 2.3x HMC's $21.34T. TM is the more profitable business, keeping 9.4% of every revenue dollar as net income compared to HMC's 2.3%. On growth, TM holds the edge at +8.2% YoY revenue growth, suggesting stronger near-term business momentum.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| RevenueTrailing 12 months | $49.39T | $21.34T |
| EBITDAEarnings before interest/tax | $6.59T | $1.52T |
| Net IncomeAfter-tax profit | $4.63T | $496.0B |
| Free Cash FlowCash after capex | $147.8B | $11.8B |
| Gross MarginGross profit ÷ Revenue | +18.0% | +20.6% |
| Operating MarginEBIT ÷ Revenue | +8.8% | +3.1% |
| Net MarginNet income ÷ Revenue | +9.4% | +2.3% |
| FCF MarginFCF ÷ Revenue | +0.3% | +0.1% |
| Rev. Growth (YoY)Latest quarter vs prior year | +8.2% | -3.4% |
| EPS Growth (YoY)Latest quarter vs prior year | +65.7% | -40.0% |
Valuation Metrics
At 8.8x trailing earnings, HMC trades at a 17% valuation discount to TM's 10.5x P/E. Adjusting for growth (PEG ratio), TM offers better value at 0.52x vs HMC's 0.56x — a lower PEG means you pay less per unit of expected earnings growth.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| Market CapShares × price | $315.9B | $39.1B |
| Enterprise ValueMkt cap + debt − cash | $506.8B | $38.5B |
| Trailing P/EPrice ÷ TTM EPS | 10.53x | 8.77x |
| Forward P/EPrice ÷ next-FY EPS est. | 0.08x | 0.08x |
| PEG RatioP/E ÷ EPS growth rate | 0.52x | 0.56x |
| EV / EBITDAEnterprise value multiple | 11.23x | 3.07x |
| Price / SalesMarket cap ÷ Revenue | 1.03x | 0.28x |
| Price / BookPrice ÷ Book value/share | 1.35x | 0.58x |
| Price / FCFMarket cap ÷ FCF | — | — |
Profitability & Efficiency
TM delivers a 12.0% return on equity — every $100 of shareholder capital generates $12 in annual profit, vs $4 for HMC. HMC carries lower financial leverage with a 0.35x debt-to-equity ratio, signaling a more conservative balance sheet compared to TM's 1.05x.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| ROE (TTM)Return on equity | +12.0% | +3.9% |
| ROA (TTM)Return on assets | +4.7% | +1.5% |
| ROICReturn on invested capital | +5.6% | +5.9% |
| ROCEReturn on capital employed | +7.7% | +5.6% |
| Piotroski ScoreFundamental quality 0–9 | 5 | 5 |
| Debt / EquityFinancial leverage | 1.05x | 0.35x |
| Net DebtTotal debt minus cash | $29.81T | -$106.6B |
| Cash & Equiv.Liquid assets | $8.98T | $4.53T |
| Total DebtShort + long-term debt | $38.79T | $4.42T |
| Interest CoverageEBIT ÷ Interest expense | 38.49x | 13.59x |
Total Returns (with DRIP)
A $10,000 investment in TM five years ago would be worth $17,804 today (with dividends reinvested), compared to $12,562 for HMC. Over the past 12 months, TM leads with a +36.7% total return vs HMC's +13.1%. The 3-year compound annual growth rate (CAGR) favors TM at 23.7% vs HMC's 9.2% — a key indicator of consistent wealth creation.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| YTD ReturnYear-to-date | +11.2% | +0.7% |
| 1-Year ReturnPast 12 months | +36.7% | +13.1% |
| 3-Year ReturnCumulative with dividends | +89.4% | +30.4% |
| 5-Year ReturnCumulative with dividends | +78.0% | +25.6% |
| 10-Year ReturnCumulative with dividends | +174.4% | +56.6% |
| CAGR (3Y)Annualised 3-year return | +23.7% | +9.2% |
Risk & Volatility
HMC is the less volatile stock with a 0.83 beta — it tends to amplify market swings less than TM's 0.93 beta. A beta below 1.0 means the stock typically moves less than the S&P 500. TM currently trades 97.4% from its 52-week high vs HMC's 86.4% drawdown — a narrower gap to the peak suggests stronger recent price momentum.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| Beta (5Y)Sensitivity to S&P 500 | 0.93x | 0.83x |
| 52-Week HighHighest price in past year | $248.90 | $34.89 |
| 52-Week LowLowest price in past year | $155.00 | $24.56 |
| % of 52W HighCurrent price vs 52-week peak | +97.4% | +86.4% |
| RSI (14)Momentum oscillator 0–100 | 59.2 | 44.6 |
| Avg Volume (50D)Average daily shares traded | 254K | 939K |
Analyst Outlook
Wall Street rates TM as "Hold" and HMC as "Hold". Consensus price targets imply 4.5% upside for HMC (target: $32) vs -26.0% for TM (target: $179). For income investors, HMC offers the higher dividend yield at 4.74% vs TM's 2.28%.
| Metric | TMToyota Motor Corp… | HMCHonda Motor Co., … |
|---|---|---|
| Analyst RatingConsensus buy/hold/sell | Hold | Hold |
| Price TargetConsensus 12-month target | $179.41 | $31.51 |
| # AnalystsCovering analysts | 15 | 18 |
| Dividend YieldAnnual dividend ÷ price | +2.3% | +4.7% |
| Dividend StreakConsecutive years of raises | 4 | 4 |
| Dividend / ShareAnnual DPS | $863.50 | $223.36 |
| Buyback YieldShare repurchases ÷ mkt cap | +2.4% | 0.0% |
Historical Charts
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Chart 1Total Return — 5 Years (Rebased to 100)
| Stock | Mar 20 | Feb 26 | Change |
|---|---|---|---|
| Toyota Motor Corpor… (TM) | 100 | 174.5 | +74.5% |
| Honda Motor Co., Lt… (HMC) | 100 | 118.42 | +18.4% |
Toyota Motor Corpor… (TM) returned +78% over 5 years vs Honda Motor Co., Lt… (HMC)'s +26%. A $10,000 investment in TM 5 years ago would be worth $17,804 today (including dividends reinvested).
Chart 2Revenue Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Toyota Motor Corpor… (TM) | $28.4T | $48.0T | +69.1% |
| Honda Motor Co., Lt… (HMC) | $14.6T | $21.7T | +48.5% |
Toyota Motor Corporation's revenue grew from $28.4T (2016) to $48.0T (2025) — a 6.0% CAGR. Honda Motor Co., Ltd.'s revenue grew from $14.6T (2016) to $21.7T (2025) — a 4.5% CAGR.
Chart 3Net Margin Trend — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Toyota Motor Corpor… (TM) | 8.1% | 9.9% | +21.8% |
| Honda Motor Co., Lt… (HMC) | 2.4% | 3.9% | +63.3% |
Toyota Motor Corporation's net margin went from 8% (2016) to 10% (2025). Honda Motor Co., Ltd.'s net margin went from 2% (2016) to 4% (2025).
Chart 4P/E Ratio History — 9 Years
| Stock | 2017 | 2025 | Change |
|---|---|---|---|
| Toyota Motor Corpor… (TM) | 0.1 | 0.1 | +0.0% |
| Honda Motor Co., Lt… (HMC) | 0.1 | 0.1 | +0.0% |
Toyota Motor Corporation has traded in a 0x–0x P/E range over 9 years; current trailing P/E is ~11x. Honda Motor Co., Ltd. has traded in a 0x–0x P/E range over 9 years; current trailing P/E is ~9x.
Chart 5EPS Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Toyota Motor Corpor… (TM) | 1,470.7 | 3,595.6 | +144.5% |
| Honda Motor Co., Lt… (HMC) | 191.16 | 536.79 | +180.8% |
Toyota Motor Corporation's EPS grew from $1470.70 (2016) to $3595.60 (2025) — a 10% CAGR. Honda Motor Co., Ltd.'s EPS grew from $191.16 (2016) to $536.79 (2025) — a 12% CAGR.
Chart 6Free Cash Flow — 5 Years
Toyota Motor Corporation generated $-1.6T FCF in 2025 (-21617% vs 2021). Honda Motor Co., Ltd. generated $-555B FCF in 2025 (-207% vs 2021).
TM vs HMC: Frequently Asked Questions
9 questions · data-driven answers · updated daily
01Is TM or HMC a better buy right now?
Honda Motor Co., Ltd. (HMC) offers the better valuation at 8.8x trailing P/E (0.1x forward), making it the more compelling value choice. Analysts rate Toyota Motor Corporation (TM) a "Hold" — based on 15 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.
02Which has the better valuation — TM or HMC?
On trailing P/E, Honda Motor Co., Ltd. (HMC) is the cheapest at 8.8x versus Toyota Motor Corporation at 10.5x. On forward P/E, Honda Motor Co., Ltd. is actually cheaper at 0.1x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Toyota Motor Corporation wins at 0.00x versus Honda Motor Co., Ltd.'s 0.01x — a PEG below 1.0 traditionally signals the market is underpricing earnings growth.
03Which is the better long-term investment — TM or HMC?
Over the past 5 years, Toyota Motor Corporation (TM) delivered a total return of +78.0%, compared to +25.6% for Honda Motor Co., Ltd. (HMC). A $10,000 investment in TM five years ago would be worth approximately $18K today (assuming dividends reinvested). Over 10 years, the gap is even starker: TM returned +174.4% versus HMC's +56.6%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.
04Which is safer — TM or HMC?
By beta (market sensitivity over 5 years), Honda Motor Co., Ltd. (HMC) is the lower-risk stock at 0.83β versus Toyota Motor Corporation's 0.93β — meaning TM is approximately 12% more volatile than HMC relative to the S&P 500. On balance sheet safety, Honda Motor Co., Ltd. (HMC) carries a lower debt/equity ratio of 35% versus 105% for Toyota Motor Corporation — giving it more financial flexibility in a downturn.
05Which has better profit margins — TM or HMC?
Toyota Motor Corporation (TM) is the more profitable company, earning 9.9% net margin versus 3.9% for Honda Motor Co., Ltd. — meaning it keeps 9.9% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: TM leads at 10.0% versus 5.6% for HMC. At the gross margin level — before operating expenses — HMC leads at 21.5%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.
06Is TM or HMC more undervalued right now?
The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Toyota Motor Corporation (TM) is the more undervalued stock at a PEG of 0.00x versus Honda Motor Co., Ltd.'s 0.01x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Honda Motor Co., Ltd. (HMC) trades at 0.1x forward P/E versus 0.1x for Toyota Motor Corporation — 0.0x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for HMC: 4.5% to $31.51.
07Which pays a better dividend — TM or HMC?
All stocks in this comparison pay dividends. Honda Motor Co., Ltd. (HMC) offers the highest yield at 4.7%, versus 2.3% for Toyota Motor Corporation (TM).
08Is TM or HMC better for a retirement portfolio?
For long-horizon retirement investors, Honda Motor Co., Ltd. (HMC) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.83), 4.7% yield). Both have compounded well over 10 years (HMC: +56.6%, TM: +174.4%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.
09What are the main differences between TM and HMC?
Both stocks operate in the Consumer Cyclical sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.
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