Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, motorcycle specialist Harley-Davidson (NYSE: HOG ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Harley's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Milwaukee (1903)|
|Market Cap||$9.19 billion|
|Trailing-12-Month Revenue||$5.21 billion|
CEO Keith Wandell (since 2009)
CFO John Olin (since 2009)
|Return on Equity (Average, Past 3 Years)||13.1%|
|Cash/Debt||$1.61 billion / $5.57 billion|
Honda Motor (NYSE: HMC )
Polaris Industries (NYSE: PII )
Sources: S&P Capital IQ and Motley Fool CAPS.
About a month ago, nckballard touched on Harley's seemingly unsustainable valuation: "The overall economy will see slow growth over the next several years at least. With slow growth in consumer demand for large discretionary purchases and increased competition, there is no justification for such a high P/E ratio."
Harley even sports an EV/EBITDA ratio of 12.3. That represents a premium to rivals Honda (10.7) and Polaris (10.1), as well as other recreational vehicle stocks like Winnebago Industries (NYSE: WGO ) (9.1).
CAPS member SwanGreenSwan elaborates on the bear case:
Harley is: 1) losing market share in the USA, a sign that consumer tastes have begun to shift to quieter, less expensive and more fuel efficient toys which suggests its pricing power is waning ... 3) EPS estimates appear vulnerable to reductions. 4) its financial services arm has a poor credit underwriting history ... 6) its premium multiple is likely to evaporate on the above factors. Dangerous curves ahead of estimate and multiple reduction. Remember there is rarely just one cockroach.
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