Harley-Davidson, Inc. (NYSE:HOG): Earnings Growth Remains Elusive

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As Harley-Davidson, Inc. (NYSE:HOG) released its latest earnings announcement on 31 December 2018, analyst consensus outlook seem bearish, as a -9.2% fall in profits is expected in the upcoming year. However, this is still an improvement on its past 5-year earnings growth rate of -11%, on average. Presently, with latest-twelve-month earnings at US$531m, we should see this fall to US$483m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Harley-Davidson

How will Harley-Davidson perform in the near future?

Over the next three years, it seems the consensus view of the 16 analysts covering HOG is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:HOG Future Profit February 20th 19
NYSE:HOG Future Profit February 20th 19

By 2022, HOG’s earnings should reach US$580m, from current levels of US$531m, resulting in an annual growth rate of 3.8%. This leads to an EPS of $3.99 in the final year of projections relative to the current EPS of $3.21. In 2022, HOG’s profit margin will have expanded from 9.3% to 12%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Harley-Davidson, I’ve compiled three key aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Harley-Davidson worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Harley-Davidson is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Harley-Davidson? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.