Harley-Davidson’s stock (HOG) has underperformed this year, falling approximately 9% since January, while the S&P 500 index has risen approximately 8%. However, the company’s business has improved marginally over the past quarter, with Q4 2022 results exceeding expectations as production levels recovered from a shutdown earlier this year.
Although investors are concerned that rising interest rates and the banking industry crisis could have a short-term impact on demand for the company’s iconic motorcycles, we believe the stock is undervalued and presents a good buying opportunity at the current price of approximately $37 per share.
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What is Harley-Davidson’s, New Stock?
We believe that the risk-to-reward ratio for HOG is favorable, as the stock is currently trading at approximately 8x forward earnings. The company’s projected automotive revenue growth for the full year is 4% to 7%, with operating income margins as high as 14.6%.
In addition, the “Hardwire” strategic plan prioritizes a low double-digit increase in earnings per share through 2025 by focusing on higher-margin motorcycles and more profitable geographic regions.
We believe the stock is undervalued and could be worth approximately $49 per share, which is approximately 30% more than its current market price. Check out our articles for more information on our analysis of Harley-Davidson’s valuation and revenue streams.
Consider our high-quality portfolio and multi-strategy portfolio, which have consistently outperformed the market since the end of 2016 if you’re seeking a more diversified portfolio.
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