At US$41.00, Is Harley-Davidson, Inc. (NYSE:HOG) Worth Looking At Closely?
Harley-Davidson, Inc. (NYSE:HOG), might not be a large cap stock, but it saw a significant share price rise of 27% in the past couple of months on the NYSE. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Harley-Davidson’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Harley-Davidson
What's The Opportunity In Harley-Davidson?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.9% below our intrinsic value, which means if you buy Harley-Davidson today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $44.49, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Harley-Davidson’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Harley-Davidson look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Harley-Davidson, it is expected to deliver a negative earnings growth of -11%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, HOG appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on HOG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on HOG should the price fluctuate below its true value.
If you'd like to know more about Harley-Davidson as a business, it's important to be aware of any risks it's facing. For example, we've found that Harley-Davidson has 3 warning signs (2 are a bit concerning!) that deserve your attention before going any further with your analysis.
If you are no longer interested in Harley-Davidson, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
