Harley-Davidson Stock Shows Potential for Gains Post Rate Cut

The report highlights Harley-Davidson's stock performance and potential upward movement following recent interest rate cuts. Successful demand for their 2024 vehicles and better-than-expected Q2 earnings further contribute to a potentially positive outlook for investors.

Date: 23-09-2024

AI Rating: 7

The report provides a detailed examination of Harley-Davidson stock (NYSE:HOG), which is currently trading at approximately $38 per share, lower than its earlier levels of $50. This decline is attributed to various economic factors, particularly inflation and high interest rates that have made vehicle financing less affordable. Despite having gained around 26% from a lower price point of $31 (recorded in June 2022), Harley's performance has not kept pace with the S&P 500, which increased by about 45% during the same timeframe.

The analysis also mentions industry comparisons, noting that Harley's shares have shown volatility with returns of 4% in 2021, 12% in 2022, and a decrease of 10% in 2023. Below average returns alongside inconsistent performance are indicative of the challenges Harley faces, particularly in attracting younger buyers as its traditional customer base ages.

Notably, the report announces a recent 34% year-on-year increase in adjusted net earnings to $1.63 per share and a 12% rise in sales to $1.62 billion for Q2 2024. These figures hint at strong demand for their upcoming 2024 model year vehicles. Furthermore, with the recent Federal Reserve rate cut, which makes financing more affordable, there’s an optimistic outlook for increased sales and potential stock appreciation.

Key Metrics Highlighted:

Adjusted Net Earnings: Increased by 34% YoY to $1.63 per share.
Sales Growth: Up by 12% YoY to $1.62 billion.
Historical Revenues: Sales were $5.84 billion in 2023, up from $5.3 billion in 2021.
Net Income: Rose to approximately $707 million in 2023 from a mere $1 million in 2020.

These elements, alongside the stock's valuation potential at around $43 per share, signal a possible upside for investors if Harley manages to capitalize on its recent operational successes and favorable macroeconomic shifts.

Stocks: HOG F