Is It Time to Ride Harley-Davidson (NYSE:HOG) Stock?
Stock Analysis & Ideas

Is It Time to Ride Harley-Davidson (NYSE:HOG) Stock?

Story Highlights

The time looks right to ride on the Harley-Davidson stock based on upbeat Q3 results, recovery in demand and production, and a bright future, especially for EV bikes. All the above-mentioned factors, coupled with the cheap valuation, make the stock a good buying opportunity.

Motorcycle maker, Harley-Davidson (NYSE:HOG) shares are trending higher, gaining almost 20% over the past week on upbeat Q3 earnings. We think that the time is just right to buy the stock, especially given the cheap valuation at current levels and strong future growth prospects.

On September 27, the company bolstered its space in the two-wheeler EV space with the SPAC reverse merger and spinoff of its electric motorcycle division into a separate company; LiveWire (NYSE: LVWR). LVWR is the first-ever, electric vehicle motorcycle company that is listed on the New York Stock Exchange. Harley-Davidson holds a 74% stake in LiveWire stock.

Robust Q3 Results

On October 26, Harley-Davidson reported robust third-quarter results, smashing the street’s expectations. Q3 EPS came in at $1.78, easily beating expectations by $0.38. Further, revenue jumped 20.4% year-over-year to $1.65 billion, outperforming estimates by nearly $290 million.

The highlight of the quarter was higher global motorcycle shipments that grew 19% year-over-year, driven by a recovery in production. HOG reiterated its full-year 2022 guidance for the HDMC revenue growth between 5% and 10%, and HDMC operating margin between 11% and 12%.

Low and Inexpensive P/E Valuations

Harley-Davidson shares are trading at an attractively low multiple. HOG stock is currently trading at a forward P/E ratio of 9.2x, reflecting a 33% discount from its five-year average of 13.7x. It is trading at an almost 30% discount to the sector P/E average of 12.9x.

Is HOG a Good Investment?

As per TipRanks, analysts are cautiously optimistic about the Harley-Davidson stock and have a Moderate Buy consensus rating, which is based on two Buys and four Holds. Harley-Davidson’s average price forecast of $45.50 implies 5.81% upside potential.

Notably, HOG stock has a top-notch Smart Score of a “Perfect 10” on TipRanks, indicating that the stock has strong potential to outperform market expectations.

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Concluding Thoughts

Though the stock has rallied recently, the discounted valuation presents a great buying opportunity for Harley-Davidson. Given the strong growth potential based on the company’s expansion plans and profitability outlook for its electric bikes, investors can think of buying the HOG stock.

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