While naysayers have wondered how many cycles Harley-Davidson (NYSE:HDI) can possibly sell, the firm's third-quarter numbers were steady. Most of the reason, of course, is that another bike -- Honda (NYSE:HMC), Suzuki, whatever -- is simply not a Harley. And for Americans with disposable income to spare, nothing else will do. Witness the Hell's Yuppies that swarm through affluent D.C. suburbs sporting headgear that, decades ago, was limited to neo-Nazi biker-gang stereotypes in drive-in B films. Even my dear old dentist Dad has a garage so full of Harleys that it's nearly impossible to stuff in a car or lawn mower.
True, this quarter's motorcycle retail sales were down 10% compared with the same period last year. But the 100th anniversary celebration for the prior-year quarter is one of those rarities in financial reporting: a management excuse that doesn't sound like bunko. There's more to be excited about the further you read: Total net revenues climbed 15% to $1.3 billion. Earnings per share were up 24% to $0.77. Free cash flow of $847 million already eclipses last year's tally for all four quarters.
There's little question that Harley's profit margins, balance sheets, and 28% return on equity make it a lot easier to love than other heavy motor industries, such as 4-wheeled box-makers like Ford (NYSE:F), DaimlerChrysler (NYSE:DCX), or GM (NYSE:GM). And though sales targets are aiming for growth in the range of 10% and lower, consistent stock buybacks and zealous work on margins reward shareholders. There's no doubt this is a great company. But is it a great price these days? My own inclination is no. Luckily, periodic cases of Wall Street nerves often give investors a chance to move Harley from their wish list to their portfolios.
For related Foolishness:
- See why Harley is good for baby.
- How many Hogs can you sell in China?
Seth Jayson's bike-happy relatives have purchased way too many Harleys over the past few years. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.
