Bridgestone (OTCMKTS:BRDCY) and Honda Motor (NYSE:HMC) Critical Contrast

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

Dividends

Honda Motor pays an annual dividend of $1.04 per share and has a dividend yield of 3.4%. Bridgestone pays an annual dividend of $0.47 per share and has a dividend yield of 2.0%. Honda Motor pays out 34.0% of its earnings in the form of a dividend. Bridgestone pays out 34.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Honda Motor is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Honda Motor has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500. Comparatively, Bridgestone has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500.

Earnings & Valuation

This table compares Honda Motor and Bridgestone”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Honda Motor	$142.43 billion	0.34	$5.52 billion	$3.06	10.06
Bridgestone	$29.30 billion	1.08	$1.88 billion	$1.35	17.19

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Honda Motor and Bridgestone, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Honda Motor	0	6	0	1	2.29
Bridgestone	1	0	0	1	2.50

Profitability

This table compares Honda Motor and Bridgestone’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Honda Motor	3.04%	5.18%	2.11%
Bridgestone	N/A	N/A	N/A

Insider and Institutional Ownership

5.3% of Honda Motor shares are held by institutional investors. 0.0% of Honda Motor shares are held by company insiders. Comparatively, 57.1% of Bridgestone shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Honda Motor beats Bridgestone on 9 of the 14 factors compared between the two stocks.

About Honda Motor

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power, and other products in Japan, North America, Europe, Asia, and internationally. It operates through four segments: Motorcycle Business, Automobile Business, Financial Services Business, and Power Product and Other Businesses. The Motorcycle Business segment produces motorcycles, including sports, business, and commuter models; and various off-road vehicles, such as all-terrain vehicles and side-by-sides. The Automobile Business segment offers passenger cars, light trucks, and mini vehicles. The Financial Services Business segment provides various financial services, including retail lending and leasing services to customers, as well as wholesale financing services to dealers. The Power Product and Other Businesses manufactures and sells power products, such as general purpose engines, lawn mowers, generators, water pumps, brush cutters, tillers, outboard marine engines, and snow throwers. This segment also offers HondaJet aircraft. The company also sells spare parts; and provides after-sale services through retail dealers directly, as well as through independent distributors and licensees. Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.

About Bridgestone

Bridgestone Corporation, together with its subsidiaries, manufactures and sells tires and rubber products. The company offers tires and tire tubes for passenger cars, trucks, buses, construction and off-road mining vehicles, industrial and agricultural machinery, aircraft, motorcycles, scooters, and other vehicles; automotive parts; automotive maintenance and repair services; and raw materials for tires and other products. It also provides chemical products, such as belts, hoses, rubber crawlers/MT pads, resin piping systems, seismic isolation rubbers, bridge rubber bearings, and block type rubber covered chain type bridge fall prevention devices. In addition, the company offers golf balls, golf clubs, and other sporting goods; bicycles, bicycle-related goods, and others; and finance and other services. It has operations in Japan, the Americas, Europe, Russia, the Middle East, India, Africa, China, Asia, Oceania, Oceania, and internationally. The company was incorporated in 1931 and is headquartered in Tokyo, Japan.