U.S. Markets open in 8 hrs 47 mins

Harley-Davidson, Inc. (NYSE:HOG): Will The Growth Last?

Frank Brewer

In September 2018, Harley-Davidson, Inc. (NYSE:HOG) announced its earnings update. Overall, analysts seem fairly confident, with earnings expected to grow by 4.8% in the upcoming year relative to the past 5-year average growth rate of -9.6%. By 2020, we can expect Harley-Davidson’s bottom line to reach US$547m, a jump from the current trailing-twelve-month of US$522m. Below is a brief commentary around Harley-Davidson’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Harley-Davidson

Can we expect Harley-Davidson to keep growing?

The view from 18 analysts over the next three years is one of 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 January 8th 19

This results in an annual growth rate of 1.6% based on the most recent earnings level of US$522m to the final forecast of US$571m by 2022. This leads to an EPS of $3.97 in the final year of projections relative to the current EPS of $3.03. With a current profit margin of 9.2%, this movement will result in a margin of 11% by 2022.

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 pertinent 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!

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.