Harley-Davidson (HOG): Evaluating Valuation as Investors Reassess Outlook in 2024

Harley-Davidson (HOG) shares have seen modest movement recently, catching the attention of investors curious about the iconic motorcycle manufacturer’s outlook. The current valuation puts recent gains and losses into sharper perspective, especially as market sentiment fluctuates.

See our latest analysis for Harley-Davidson.

Despite some early 2024 volatility, Harley-Davidson’s shares have shown mixed momentum this year. Recent gains have offset earlier declines. The latest share price of $27.36 puts the stock down 7% year-to-date and the 1-year total shareholder return at -14%. This highlights that longer-term performance has lagged even as investors weigh whether sentiment is starting to shift.

If Harley-Davidson’s story has you reassessing your strategies in autos, this might be the perfect time to explore See the full list for free.

The big question for investors now is whether Harley-Davidson’s recent share price reflects untapped value, or if the market is already accounting for any growth that lies ahead, leaving little room for upside.

Most Popular Narrative: 6.7% Undervalued

With Harley-Davidson’s last close price at $27.36 and the most popular fair value estimate at $29.33, the narrative sees the stock trading below what is projected based on future fundamentals. This sets the stage for a closer look at what is driving this estimate and why some believe Harley-Davidson’s outlook deserves a higher price tag.

The new partnership in HDFS unlocks significant cash ($1.25B) and reduces leverage. This enables accelerated share buybacks and frees up $300M for growth investments, which can directly bolster EPS and future revenue streams through both financial engineering and new business initiatives.

Read the complete narrative.

Curious what kind of financial engineering and bold bets underpin this potential upside? The heart of this narrative is about unlocked capital, rapid share buybacks, and a profits roadmap that turns heads. Want to see which numbers the narrative believes can light the next stage of Harley’s comeback? Dive in to discover what’s beneath the headline figures and why this fair value could be just the starting line.

Result: Fair Value of $29.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weak demand and an aging core customer base could easily challenge the optimistic outlook and put pressure on Harley-Davidson’s growth story.

Find out about the key risks to this Harley-Davidson narrative.

Another View: Multiples Tell a Different Story

Looking at Harley-Davidson through the lens of its price-to-earnings ratio shows a different side. At 13.7x, the company is trading at a discount compared to both global auto peers (18.4x) and its closest rivals (17.5x). However, the fair ratio implies an even lower number, 10.5x. This suggests the shares could still be pricey if the market trends toward that benchmark. So, is the apparent discount a real opportunity, or could there be more downside if the market re-rates?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Harley-Davidson Narrative

If you see the numbers differently or want to chart your own course, you can analyze the data yourself and build a narrative in just minutes. Do it your way

A great starting point for your Harley-Davidson research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Sharpen your edge and expand your opportunities with fresh investment ideas. The right screen could reveal tomorrow’s winners. Don’t let your next portfolio standout pass you by.

• Tap into the AI-driven companies making waves in automation, innovation, and transforming every industry with these 26 AI penny stocks.
• Take advantage of stocks trading below their real worth by checking out these 864 undervalued stocks based on cash flows that could unlock greater value for your portfolio.
• Secure reliable passive income streams by finding companies with strong payouts and stability through these 21 dividend stocks with yields > 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com