What Should Investors Know About Harley-Davidson Inc’s (NYSE:HOG) Future?

Based on Harley-Davidson Inc’s (NYSE:HOG) earnings update on 30 September 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 5.0% next year relative to the past 5-year average growth rate of -9.6%. Presently, with latest-twelve-month earnings at US$539m, we should see this growing to US$566m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Harley-Davidson in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Harley-Davidson

Exciting times ahead?

Over the next three years, it seems the consensus view of the 18 analysts covering HOG is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of HOG’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:HOG Future Profit November 7th 18
NYSE:HOG Future Profit November 7th 18

By 2021, HOG’s earnings should reach US$576m, from current levels of US$522m, resulting in an annual growth rate of 2.1%. EPS reaches $4.15 in the final year of forecast compared to the current $3.03 EPS today. The primary reason for earnings growth is due to reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 9.2%, this movement will result in a margin of 11% by 2021.

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 fundamental factors 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!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.