Harley-Davidson
HOG
We think Harley Davidson stock looks like an attractive bet at current levels of about $37 per share. Although there could be some near-term headwinds for the auto industry, the risk-to-reward ratio for HOG looks positive, with the stock trading at just about 8x forward earnings. The company also has room to grow earnings, given that it has projected full-year automotive revenue growth of 4% to 7% with operating income margins projected as much as 14.6% (a 70 bps increase versus last year). The company’s “Hardwire” strategic plan is also promising. Under this plan, the company has prioritized growing its earnings per share by low double-digits through 2025, by focusing on higher-margin motorcycles (including Touring bikes, large Cruiser, and Trike) and more profitable geographic areas. We value HOG stock at about $49 per share, about 30% ahead of the current market price. See our analysis on Harley- Davidson Valuation: Expensive or Cheap for more details. Also, check out our analysis of Harley-Davidson Revenue for more information on the company’s key revenue streams and how they are trending.
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