Honda Motor Shares: Ready for a Comeback?

Don't call it comeback if Honda Motor Company (NYSE:HMC) manages to pull of a decent Q1 2010 earnings call next week (July 28th) and all anyone cares about is the guidance -- will things improve?  Honda sales were down 30% in June and in the last 3 months Honda shares have only managed to drop 3.4%.  HMC shares are stuck in the $27 to $30 range, so can it finally move come next week or will Asimo spill the coffee?

CAN ASIMO & HONDA PULL IT OFF

That's the big question we are all wondering and with auto sales doing so poorly when will we hit bottom or even stabilize?

The latest on Honda via BusinessWeek.com --

Toyota (TM) and Honda (HMC) have not been discounting vehicles as deeply as some rivals and they are paying for it: Toyota's U.S. sales fell 27% and Honda's were down 30%. "Consumers are really focused on price/value right now," says Edmunds.com analyst Jesse Toprak. Nissan (NSANY), though, with higher incentives than its Asian rivals, saw sales drop by only 23%. Subaru continued to impress by posting a 3.4% sales gain June-over-June.

Overall, small and midsize cars did better than larger vehicles last month as a new frugality settled in with consumers. Combined retail sales of small cars, such as the Honda Fit and Toyota Yaris, and subcompacts, such as Toyota's Corolla and Ford's Focus, continued to climb. Those cars accounted for 22.1% of sales last month, vs. 19.5% in February.

.....

The Cash for Clunkers bill goes into effect later this month, when consumers can start trading in older cars and get government vouchers for up to $4,500. Besides the benefit to the pickup business, analysts expect that it will boost Toyota and Honda sales because they have the most cars that qualify for the program as a percentage of their overall showroom models. Toyota has 15 vehicles that can be bought through the program, as well as five Lexus models and all three Scion models. Chrysler and Jeep brands, by contrast, have just two, though Dodge has a few more.

LOW EXPECTATIONS

Fellow Masters, we like how Honda shares are hanging out in the high $20 range, but until we hear a formal guidance taking a chance picking up shares before the call is a roll of the dice.

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. warned investors that the early part of this year would be difficult after they sank into the red during the fiscal fourth quarter that ran to March 31.

Honda has said it anticipates a loss in the first half but a return to profit in the second half, resulting in a small profit for the year.

However as we all know, any glimmer of hope can send HMC shares up 5 to 10% next week, stay tuned.

HONDA SHARES (HMC) 101:

Disclaimer: No positions in HMC.