Is Now The Time To Put Harley-Davidson (NYSE:HOG) On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Harley-Davidson (NYSE:HOG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Harley-Davidson with the means to add long-term value to shareholders.

View our latest analysis for Harley-Davidson

How Quickly Is Harley-Davidson Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Shareholders will be happy to know that Harley-Davidson's EPS has grown 23% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. It's noted that Harley-Davidson's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Harley-Davidson achieved similar EBIT margins to last year, revenue grew by a solid 7.8% to US$5.8b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Harley-Davidson.

Are Harley-Davidson Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Despite US$458k worth of sales, Harley-Davidson insiders have overwhelmingly been buying the stock, spending US$1.1m on purchases in the last twelve months. An optimistic sign for those with Harley-Davidson in their watchlist. We also note that it was the Chairman, Jochen Zeitz, who made the biggest single acquisition, paying US$1.0m for shares at about US$38.94 each.

On top of the insider buying, it's good to see that Harley-Davidson insiders have a valuable investment in the business. Indeed, they hold US$35m worth of its stock. That's a lot of money, and no small incentive to work hard. Even though that's only about 0.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Is Harley-Davidson Worth Keeping An Eye On?

For growth investors, Harley-Davidson's raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. It is worth noting though that we have found 2 warning signs for Harley-Davidson (1 is concerning!) that you need to take into consideration.

Keen growth investors love to see insider buying. Thankfully, Harley-Davidson isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.