Here's Why You Should Offload Honda Stock From Your Portfolio

Honda Motor Co., Ltd. HMC, a leading manufacturer of automobiles and the largest producer of motorcycles in the world, is facing challenges in Asia due to higher taxes and policy changes. The company also expects EV-related operating losses to widen in fiscal 2026.Let’s see why you should consider offloading this Zacks Rank #4 (Sell) stock from your portfolio.Contracting Sales in Asia & Rising EV Expenses to Ail HondaAsia’s auto market — especially in Indonesia and Malaysia — is contracting due to higher taxes and policy changes, leading to declines in both unit sales and market share. In Thailand, intensified competition from Chinese entrants and aggressive incentives, along with sharper price cuts from Japanese rivals, are further pressuring sales. As a result, Honda has made a downward revision in its full-year Asia sales forecast from 390,000 units to 315,000 units.The automaker expects a JPY200 billion loss for fiscal 2026, consistent with earlier guidance, and an additional JPY50 billion loss allowance. As a result, expected EV-related operating losses have risen to about JPY650 billion, including around JPY400 billion from normal EV operations. Of this, roughly JPY100 billion stems from gross profit shortfalls, while about JPY300 billion reflects R&D costs, primarily for the upcoming Honda 0 series.Rising capex requirement is likely to hurt the company’s cash flows. Capital expenditure for fiscal 2026 is expected to jump nearly 23% to 660 billion yen. Notably, Honda is investing $48 billion (7 trillion yen) over the period through 2031.Rising debt levels are something to keep an eye on. Long-term debt was around ¥8,133 billion as of Sept. 30, 2025, up from ¥6,953 billion as of March 31, 2025. While the long-term debt to capital ratio is manageable at 0.40, it's higher than the industry’s 0.29.Honda has a Return on Equity (ROE) of 5.2%, which is lower than the industry’s 8.6%. Low ROE suggests a below-average return and indicates that the company may not be using shareholder capital very effectively to generate profits.Stocks to ConsiderSome better-ranked stocks in the auto space are General Motors Company GM, OPENLANE, Inc. KAR and Garrett Motion Inc. GTX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for GM’s 2025 and 2026 EPS has improved 8 cents and 20 cents, respectively, in the past seven days.The Zacks Consensus Estimate for KAR’s 2025 sales and earnings implies year-over-year growth of 9.4% and 48.2%, respectively. EPS estimates for 2025 and 2026 have improved 9 cents and 11 cents, respectively, in the past 30 days.The Zacks Consensus Estimate for GTX’s 2025 sales and earnings implies year-over-year growth of 2.6% and 16.7%, respectively. EPS estimates for 2025 and 2026 have improved 12 cents and 22 cents, respectively, in the past 30 days. Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report OPENLANE, Inc. (KAR): Free Stock Analysis Report Garrett Motion Inc. (GTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks