Harley-Davidson IncHOG

Morningstar Rating

Stock Research and Analysis

by Jaime M. Katz, CFA

Harley-Davidson is one of the most storied brands in the recreation industry. With more than 100 years of experience manufacturing large-displacement bikes, its brand strength, dealer network, and dominant position in the domestic motorcycle market Read more

Bulls Say

Harley-Davidson's brand is more than 100 years old and resonates globally with a wide consumer base, particularly its target market (35- to 54-year-olds).

The company has historically generated strong free cash flow, and we expect it to continue to do so, producing $4 billion of cumulative free cash flow over the next five years.

Harley is the market share leader in the custom and touring segments, two of the most profitable motorcycle categories.

The firm has an extensive dealer network, which stands to benefit from reduced inventory during the past few years. Read more

Bears Say

Harley-Davidson's core demographic, the baby boomer generation, is aging, and that is likely to reduce the demand for Harley's products. To mitigate the lost revenue from this consumer, outreach to other segments must be successful.

The large inventory of used Harley motorcycles may contribute to some near-term weakness, as a greater number of under-pressure consumers may opt for less-expensive used models.

HDFS is highly dependent on credit availability in the retail market. If credit standards tighten, the cost of financing could increase, which could decrease the number of loans to customers and depress retail sales. Read more

Management

We like the management changes that have occurred during the past few years. The senior management team underwent a facelift in 2009 as Keith Wandell took the reins as CEO and John Olin, Harley's previous controller, was promoted to CFO. Wandell was Read more

Profile

Harley-Davidson is the world's leading manufacturer of heavyweight motorcycles, parts, and accessories. It sells the Softail, Sportster, Dyna, Touring, and VRSC models under Read more