Is Harley-Davidson Fairly Priced After This Week’s 6% Share Price Rise?

• Curious if Harley-Davidson stock is priced right for your portfolio? Let’s take a closer look at whether this iconic brand is currently undervalued or has more downside ahead.
• The stock has seen a 6.3% pop over the past week, but is still down 17.1% year-to-date and has lost 25.8% in the past twelve months. This raises questions about both upside potential and shifting risk perceptions.
• Recent headlines about Harley-Davidson's strategic investments in electric bikes and global market expansion have put the company back in the spotlight. These developments are shaping investor sentiment and could be influencing the stock's recent price swings.
• On our 6-point valuation check, Harley-Davidson scores 3 out of 6 for being undervalued. Let’s break down what this means using different valuation models. Plus, see why a fresh, big-picture approach might matter most.

Find out why Harley-Davidson's -25.8% return over the last year is lagging behind its peers.

Approach 1: Harley-Davidson Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future free cash flows and discounting them back to today's dollars. This approach helps investors determine what the business is fundamentally worth, based on its ability to generate cash over time.

For Harley-Davidson, the most recent reported Free Cash Flow stands at $384.6 million. Looking ahead, analysts anticipate an initial increase to around $424.6 million by 2026, with gradually declining annual growth rates through the subsequent years. By 2035, the extrapolated Free Cash Flow is projected at approximately $270.8 million. It is important to note that while analyst estimates cover the next five years, the longer-term outlook relies on further projections to create a full picture.

The DCF model calculates an intrinsic value of $22.31 per share for Harley-Davidson stock, using these cash flow estimates. With the current share price about 9.4 percent above this valuation, the stock appears just slightly overvalued based on this method. This suggests the market price is, for now, fairly aligned with the company's cash-generating potential.

Result: ABOUT RIGHT

Harley-Davidson is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Harley-Davidson.

Approach 2: Harley-Davidson Price vs Earnings

For profitable companies like Harley-Davidson, the price-to-earnings (PE) ratio is a widely used valuation method. The PE ratio measures how much investors are paying for each dollar of a company's earnings, offering a quick snapshot of how the market values the company's profit potential. Typically, higher expected growth or lower risk justifies a higher PE ratio, while slower growth or higher risk leads to a lower "normal" PE.

Currently, Harley-Davidson trades at a PE ratio of 5.8x, which is noticeably below the auto industry average of 18.7x and the average of similar peers at 19.0x. At first glance, this low PE might suggest the stock is undervalued, but simple comparisons can be misleading if unique company traits are ignored.

That's where Simply Wall St’s "Fair Ratio" comes in. This is a proprietary metric that blends not just industry data but also Harley-Davidson’s specific growth outlook, profit margins, risk profile, and market cap. This method gives a more tailored benchmark than looking at broad industry or peer averages. For Harley-Davidson, the Fair Ratio is 7.3x. With its current PE at 5.8x, there is a modest gap, but not so wide as to suggest a dramatic mispricing. The stock appears only slightly undervalued by this measure, and overall, the valuation aligns reasonably well with the company’s characteristics.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Harley-Davidson Narrative

Earlier we mentioned that there is a more effective way to understand valuation, so let's introduce you to Narratives. A Narrative is a clear, customizable story you create about a company, such as Harley-Davidson, by linking your expectations for its future (like sales or profit growth) directly to your fair value estimate and price assumptions. With Narratives on Simply Wall St’s Community page, you can easily combine your research and perspective into a financial forecast, then instantly compare your fair value with Harley-Davidson’s latest share price to help decide when to buy or sell. Narratives update automatically as new news, results, or market developments appear, ensuring your investment thesis evolves in real time. For example, users tracking Harley-Davidson might reach widely different conclusions: a bullish Narrative could assume brand revitalization and global growth will push fair value as high as $34 per share, while a more cautious perspective might highlight declining demand or margin risks, lowering fair value to $27. Narratives let you and millions of investors make smarter choices by showing how real stories and new data shape your fair value, all in one intuitive tool.

Do you think there's more to the story for Harley-Davidson? Head over to our Community to see what others are saying!

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.

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