February 28, 2016
NYSE: HOG
HARLEY-DAVIDSON INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$1.24
B-
C+
C
Annual Dividend Yield
2.86%
SELL
C-
D+
D
Beta
0.86
Sector: Consumer Goods & Svcs
Weekly Price: (US$)
HOG BUSINESS DESCRIPTION
Harley-Davidson, Inc. primarily manufactures
cruiser and touring motorcycles. The company
operates through two segments, Motorcycles &
Related Products, and Financial Services.
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-12.89
D-
E+
E
E-
F
Market Capitalization
$8.0 Billion
HOLD
52-Week Range
$36.36-$65.20
Sub-Industry: Motorcycle Manufacturers
SMA (50)
RATING SINCE
SMA (100)
01/04/2016
Price as of 2/25/2016
$43.32
Source: S&P
1 Year
2 Years
75
70
65
60
1 Yr.
-31.63
3 Yr (Ann)
-5.08
12 Mo.
-3.75
-10.95
-6.46
3 Yr CAGR
2.42
6.43
10.13
55
50
GROWTH (%)
45
Last Qtr
-1.63
-43.35
-37.15
Revenues
Net Income
EPS
RETURN ON EQUITY (%)
HOG
Q4 2015
40.88
Q4 2014
29.03
Q4 2013
24.38
40
35
Rating History
BUY
Ind Avg
-3.17
5.40
9.98
S&P 500
12.28
14.59
13.97
HOLD
Volume in Millions
75
50
25
2014
2015
2016
0
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate HARLEY-DAVIDSON INC (HOG) a HOLD. The primary factors that have impacted our rating are mixed
- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either
a positive or negative performance for this stock relative to most other stocks. The company's strengths can
be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a
counter to these strengths, we also find weaknesses including a generally disappointing performance in the
stock itself, deteriorating net income and weak operating cash flow.
11.97
11.45
21.53
HOG
Ind Avg
S&P 500
HIGHLIGHTS
The company's current return on equity greatly increased when compared to its ROE from the same quarter
one year prior. This is a signal of significant strength within the corporation. Compared to other companies in
the Automobiles industry and the overall market, HARLEY-DAVIDSON INC's return on equity significantly
exceeds that of both the industry average and the S&P 500.
2013
2014
Q4 0.22
Q3 0.69
Q2 1.44
46.63% is the gross profit margin for HARLEY-DAVIDSON INC which we consider to be strong. It has
increased from the same quarter the previous year. Regardless of the strong results of the gross profit
margin, the net profit margin of 3.57% trails the industry average.
Q1 1.27
Q4 0.35
Q3 0.69
Q2 1.62
Q1 1.21
Q4 0.34
Q3 0.73
Q2 1.21
Q1 0.99
EPS ANALYSIS¹ ($)
HOG, with its decline in revenue, underperformed when compared the industry average of 17.5%. Since the
same quarter one year prior, revenues slightly dropped by 1.6%. Weakness in the company's revenue seems
to have hurt the bottom line, decreasing earnings per share.
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
Net operating cash flow has significantly decreased to $79.16 million or 55.97% when compared to the same
quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the
last year: it has tumbled by 31.63%, worse than the S&P 500's performance. Consistent with the plunge in the
stock price, the company's earnings per share are down 37.14% compared to the year-earlier quarter.
Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap
and attractive. The reality is that, based on its current price in relation to its earnings, HOG is still more
expensive than most of the other companies in its industry.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NYSE: HOG
HARLEY-DAVIDSON INC
Sector: Consumer Goods & Svcs Motorcycle Manufacturers Source: S&P
Annual Dividend Rate
$1.24
Annual Dividend Yield
2.86%
PEER GROUP ANALYSIS
30%
V
FA
AB
OR
LE
R
VO
FA
-5%
LE
AB
Revenue Growth (TTM)
UN
WGO
TM
GM
-10%
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $507.8 Million and $176.2
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
30%
REVENUE GROWTH AND EARNINGS YIELD
V
FA
AB
OR
LE
R
VO
FA
-5%
LE
AB
Revenue Growth (TTM)
UN
-5%
HOG
US congress toughened the Corporate Average Fuel Economy (CAFE) regulations in 2007 that no longer grant
exemptions to light trucks classified as SUVs or passenger vans unless they exceed 10,000 lbs. In the near
future, the standard is to be modified to accommodate many larger vehicles.
Consumer choice in vehicles is more than ever being influenced by fuel efficiency. Automakers are exploring
alternate fuels such as ethanol and electric fuel cells and are delivering hybrid gasoline-electric vehicles and
pure-electric car for sale. The new cars are lighter, provide better fuel efficiency, enhanced safety features,
and many come with tax credits from the government to make costs competitive. Having an auto industry is
considered to be in the strategic interest of America and was bailed-out to help it survive the Great
Recession.
Manufacturers have recognized growing demand from developing economies and the opportunity to increase
auto parts sourcing from these economies.
PEER GROUP: Automobiles
FCAU
WGO
Huge health care and fringe benefits provided to big three employees give foreign competitors a strong
advantage. All three are negotiating new labor contracts with the United Auto Workers (UAW) union. With
these on-going negotiations, the big three hope to reduce the profit-per-vehicle gap. Reduced sales, different
platforms for parts, high raw material costs and tough exchange rates are other hurdles facing the industry.
The motorcycle industry is reeling under pressures such as volatile raw material costs, high gasoline prices
and reduced consumer spending. Harley’s heavy motorcycle sales have remained relatively flat, but light
motorcycle sales have been hurt by tough economic conditions.
HMC
THO
Price as of 2/25/2016
$43.32
HOG20%
EBITDA Margin (TTM)
TSLA
52-Week Range
$36.36-$65.20
Surging oil prices have shifted demand away from SUVs and light trucks to more fuel-efficient options. This
change in consumer preferences has supported German, Japanese and Korean manufacturers, whose
market share has consequently expanded. The big three are trying to adapt their product lines to changing
preferences.
HMC
THO
Market Capitalization
$8.0 Billion
INDUSTRY ANALYSIS
The automobile industry is comprised of companies that design, manufacture, engineer, assemble and market
automobiles and motorcycles as well as provide leasing and financial services. Industry performance is
closely linked with overall economic performance. Major players include General Motors (GM), Ford Motor
Company (F) and Chrysler. This group is commonly referred to as Detroit’s big three. BMW, Daimler (DAI),
Honda (HMC), Hyundai, Mazda, Nissan, Subaru, Toyota (TM) and Harley-Davidson (HOG) are other prominent
players. There are also niche players such as Winnebago Industries (WGO) for motor- homes and Tesla
Motors (TSLA) for high-end electric cars.
REVENUE GROWTH AND EBITDA MARGIN*
TSLA
Beta
0.86
TM
GM
25%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -3.8% and
26.5%. Companies with NA or NM values do not
appear.
Ticker
HOG
FCAU
WGO
HMC
GM
THO
TSLA
TM
Recent
Company Name
Price ($)
HARLEY-DAVIDSON INC
43.32
FIAT CHRYSLER AUTOMOBILES NV 6.40
WINNEBAGO INDUSTRIES
18.82
HONDA MOTOR CO LTD
25.64
GENERAL MOTORS CO
29.50
THOR INDUSTRIES INC
55.30
TESLA MOTORS INC
187.43
TOYOTA MOTOR CORP
105.57
Market
Cap ($M)
7,972
9,735
508
46,445
45,563
2,902
24,751
176,196
Price/
Earnings
11.97
106.67
12.72
10.64
4.92
13.69
NM
8.54
Net Sales
TTM ($M)
5,995.40
120,095.11
966.33
124,554.90
152,356.00
4,115.18
4,046.02
237,384.00
Net Income
TTM ($M)
752.21
409.38
39.87
4,342.82
9,687.00
210.96
-888.66
19,390.00
The peer group comparison is based on Major Motorcycle Manufacturers companies of comparable size.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NYSE: HOG
HARLEY-DAVIDSON INC
Sector: Consumer Goods & Svcs Motorcycle Manufacturers Source: S&P
Annual Dividend Rate
$1.24
Annual Dividend Yield
2.86%
COMPANY DESCRIPTION
Harley-Davidson, Inc. manufactures cruiser and touring
motorcycles. The company operates in two segments,
Motorcycles & Related Products and Financial Services.
The Motorcycles & Related Products segment designs,
manufactures, and sells wholesale street-legal
Harley-Davidson motorcycles, as well as a line of
motorcycle parts, accessories, general merchandise, and
related services. This segment manufactures six
platforms of motorcycles: Touring, Dyna, Softail,
Sportster, V-Rod, and Street. It offers motorcycle parts
and accessories comprising replacement parts, and
mechanical and cosmetic accessories; general
merchandise, such as MotorClothes apparel and riding
gear; and motorcycle rentals and motorcycle rider
training services, as well as licenses the Harley-Davidson
name and other trademarks. This segment sells its
products to retail customers through a network of
independent dealers primarily in North America, Europe,
the Middle East, Africa, the Asia-Pacific, and Latin
America. The Financial Services segment provides
wholesale and retail financing, and insurance and
insurance-related programs to dealers and retail
customers. It also offers wholesale financial services,
including floor plan and open account financing of
motorcycles, and motorcycle parts and accessories; and
operates an insurance agency that offers point-of-sale
protection products through Harley-Davidson dealers in
the United States and Canada, including motorcycle
insurance, extended service contracts, credit protection,
and motorcycle maintenance protection.
Harley-Davidson, Inc. was founded in 1903 and is
headquartered in Milwaukee, Wisconsin.
HARLEY-DAVIDSON INC
3700 West Juneau Avenue
Milwaukee, WI 53208
USA
Phone: 414-342-4680
http://www.harley-davidson.com
Beta
0.86
Market Capitalization
$8.0 Billion
52-Week Range
$36.36-$65.20
Price as of 2/25/2016
$43.32
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of HOG shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
2.5
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, HOG has a growth score better than 40% of
the stocks we rate.
strong
2.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 30% of the companies we
cover.
strong
4.5
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 80% of the companies we review.
strong
2.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 30% of the stocks we monitor.
strong
2.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 30% of the companies we analyze.
strong
4.0
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 70% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NYSE: HOG
HARLEY-DAVIDSON INC
Sector: Consumer Goods & Svcs Motorcycle Manufacturers Source: S&P
Annual Dividend Rate
$1.24
Annual Dividend Yield
2.86%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
1.31
4.00 E
4.38 E
Q1 FY16
2016(E)
2017(E)
Beta
0.86
Market Capitalization
$8.0 Billion
52-Week Range
$36.36-$65.20
Price as of 2/25/2016
$43.32
FINANCIAL ANALYSIS
HARLEY-DAVIDSON INC's gross profit margin for the fourth quarter of its fiscal year 2015 has increased when
compared to the same period a year ago. Sales and net income have dropped, underperforming the average
competitor within its industry. HARLEY-DAVIDSON INC has average liquidity. Currently, the Quick Ratio is 1.15
which shows that technically this company has the ability to cover short-term cash needs. The company's
liquidity has decreased from the same period last year, indicating deteriorating cash flow.
At the same time, stockholders' equity ("net worth") has significantly decreased by 36.76% from the same
quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the
company will face financial difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q4 FY15
1,180.64
164.32
108.27
42.20
Q4 FY14
1,200.16
191.68
143.07
74.48
Q4 FY15
855.67
9,991.17
6,890.39
1,839.65
Q4 FY14
1,062.63
9,528.10
5,504.63
2,909.29
Q4 FY15
46.63%
13.91%
9.17%
0.60
7.52%
40.88%
Q4 FY14
44.31%
15.97%
11.92%
0.65
8.86%
29.03%
Q4 FY15
1.45
0.79
47.17
2.30
Q4 FY14
1.65
0.65
41.96
3.41
Q4 FY15
185
0.31
0.22
9.96
NA
3,107,576
Q4 FY14
212
0.28
0.35
13.73
NA
3,484,146
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NYSE: HOG
HARLEY-DAVIDSON INC
Sector: Consumer Goods & Svcs Motorcycle Manufacturers Source: S&P
Annual Dividend Rate
$1.24
Annual Dividend Yield
2.86%
RATINGS HISTORY
Our rating for HARLEY-DAVIDSON INC was recently
downgraded from Buy to Hold on 1/4/2016. As of
2/25/2016, the stock was trading at a price of $43.32
which is 33.6% below its 52-week high of $65.20 and
19.1% above its 52-week low of $36.36.
HOLD: $45.52
BUY: $63.99
2 Year Chart
2014
Beta
0.86
Market Capitalization
$8.0 Billion
Price/Earnings
1
2
3
premium
4
5
HOG 11.97
Peers 11.45
• Average. An average P/E ratio can signify an
industry neutral price for a stock and an average
growth expectation.
• HOG is trading at a valuation on par with its peers.
Price/Projected Earnings
From
Buy
Buy
To
Hold
Buy
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 2/25/2016)
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
2
3
premium
Price reflects the closing price as of the date listed, if available
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
1
4
5
1
2
3
premium
4
5
Price/Sales
1
2
premium
3
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
HOG 1.43
Peers 0.72
• Premium. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• HOG trades at a significant premium to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
HOG -6.46
Peers 37.52
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, HOG is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
HOG 1.33
Peers 0.96
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• HOG is trading at a significant premium to its
industry.
3
HOG 7.27
Peers 4.33
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• HOG is trading at a significant premium to its peers.
discount
HOG 4.35
Peers 2.64
• Premium. A higher price-to-book ratio makes a
stock less attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• HOG is trading at a significant premium to its peers.
2
premium
discount
HOG 9.89
Peers 17.08
• Discount. A lower price-to-projected earnings ratio
than its peers can signify a less expensive stock or
lower future growth expectations.
• HOG is trading at a significant discount to its peers.
Price/Book
1
Price/CashFlow
discount
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
1/4/16
$45.52 Downgrade
2/25/14
$63.99 No Change
Price as of 2/25/2016
$43.32
VALUATION
HOLD. This stock's P/E ratio indicates a premium compared to an average of 11.45 for the Automobiles
industry and a discount compared to the S&P 500 average of 21.53. For additional comparison, its
price-to-book ratio of 4.35 indicates a significant premium versus the S&P 500 average of 2.56 and a
significant premium versus the industry average of 2.64. The current price-to-sales ratio is below the S&P 500
average, but above the industry average. Upon assessment of these and other key valuation criteria,
HARLEY-DAVIDSON INC proves to trade at a premium to investment alternatives within the industry.
$75
$50
52-Week Range
$36.36-$65.20
1
2
3
lower
4
5
higher
HOG -3.75
Peers 4.39
• Lower. A sales growth rate that trails the industry
implies that a company is losing market share.
• HOG significantly trails its peers on the basis of
sales growth
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5