Can Harley Davidson Continue Its Hog-Selling Spike?

One of America's legendary brands, Harley Davidson (NYSE: HOG  ) , continued its string of successes yesterday when it released its latest earnings to investors and analysts. The motorcycle maker, well recovered since its dark days years ago, found its latest sales push from the introduction of eight new models. Though definitively American, Harley is an increasingly popular bike beyond our shores, where a near-majority of its machines are sold. Of course, as with any company and stock that has achieved a long run of success, some investors are wondering whether Harley can keep revving higher. Let's take a closer look at recent earnings to determine if Harley is still a prize hog.

Earnings recap
Harley Davidson sold 15% more bikes in the third quarter as part of a carefully crafted plan to brace against rival Polaris' rebooted Indian motorcycles. Harley's market share rose to 56.5% domestically, and helped drive net income up an impressive 21%, to $0.73 per share. In the year-ago quarter, the company earned just $0.59 per share. The market had been expecting the exact figure, though underestimated top-line earnings by about $10 million. Harley logged $1.18 billion in sales, an 8.4% climb from 2012's third quarter.

The big gains in bike sales -- 20% in the U.S., 16% in Latin America, and 10% in Asia -- represented the company's largest year-over-year increase in two decades. Besides the aforementioned international interest, Harley also introduced its Project Rushmore lineup -- eight bikes with cutting-edge technology that make up the largest model introduction in the company's history. The releases were conveniently timed just days after Polaris announced the Indian revival.

The market reacted mildly to the news, with the stock ticking down slightly. The reason may have something to do with the fact that, even with the impressive sales figures, management did not feel the need to raise guidance for global shipments or earnings.

Looking ahead, the company needs to continue growing at a decent clip in order to justify its near-17 times forward earnings multiple.

High gear
The past three months offered plenty to celebrate, and it's good to see management's ability to jazz up the product lineup and generate fresh interest. Internationally, most of the Harley's sales are from first-time buyers -- a good sign that the company is finding new demographics. In recent years, Harley has shifted some manufacturing back to the United States, which gives the company some goodwill among domestic shoppers.

Big-ticket consumer goods have been surprisingly resilient amid a less-appealing macro-spending environment. Harley has certainly been able to benefit, as well.

The combination of solid fundamentals and beneficial macro conditions should allow the company to keep cruising at its recent pace, but don't assume that the stock is a great bargain. Investors and analysts seem to have a close eye on Harley's business, and the stock price reflects a relatively full valuation. For growth-seeking investors, though, Harley may still provide compelling upside if all continues to go according to plan.

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