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

Core Viewpoint - Honda Motor Co., Ltd. is facing significant challenges in its Power Products segment, with declining revenues and increasing expenses, leading to a recommendation to consider offloading the stock [1]. Group 1: Power Products Segment Performance - The Power Products segment has experienced a revenue decline, with unit sales dropping 32.5% to 3,812,000 units in fiscal 2024, and a further anticipated decrease of 4% to 3,660,000 units in fiscal 2025 [2]. Group 2: Research and Development Expenses - High R&D expenses for advanced technologies and alternative fuels are expected to limit near-term margins, with projected R&D costs for fiscal 2025 at ¥1.2 trillion, up from ¥976 billion in fiscal 2024 [3]. - Capital expenditure for fiscal 2025 is expected to increase by 54.7% to ¥600 billion, with a total investment of $65 billion (¥10 trillion) planned through 2030 [3]. Group 3: Currency Effects on Profitability - Unfavorable currency effects have negatively impacted Honda's operating profit, with an estimated loss of ¥56.3 billion in the first nine months of fiscal 2025 and a projected impact of ¥100.5 billion for the entire fiscal year [4]. Group 4: Rising Debt Levels - Honda's long-term debt has increased to approximately ¥6.76 trillion as of December 31, 2024, up from ¥6.05 trillion as of March 31, 2024, with a long-term debt to capital ratio of 0.33, higher than the industry average of 0.27 [5].