Yahoo Finance Does Harley-Davidson (NYSE:HOG) Deserve A Spot On Your Watchlist?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Harley-Davidson (NYSE:HOG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Harley-Davidson with the means to add long-term value to shareholders.
View our latest analysis for Harley-Davidson
How Fast Is Harley-Davidson Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. We can see that in the last three years Harley-Davidson grew its EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Not all of Harley-Davidson's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. While we note Harley-Davidson achieved similar EBIT margins to last year, revenue grew by a solid 10% to US$5.3b. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Harley-Davidson's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Harley-Davidson Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Despite US$346k worth of sales, Harley-Davidson insiders have overwhelmingly been buying the stock, spending US$1.1m on purchases in the last twelve months. This overall confidence in the company at current the valuation signals their optimism. Zooming in, we can see that the biggest insider purchase was by Chairman Jochen Zeitz for US$1.0m worth of shares, at about US$38.94 per share.
The good news, alongside the insider buying, for Harley-Davidson bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold US$31m worth of its stock. This considerable investment should help drive long-term value in the business. Even though that's only about 0.6% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Does Harley-Davidson Deserve A Spot On Your Watchlist?
As previously touched on, Harley-Davidson is a growing business, which is encouraging. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. Still, you should learn about the 2 warning signs we've spotted with Harley-Davidson (including 1 which doesn't sit too well with us).
Keen growth investors love to see insider buying. Thankfully, Harley-Davidson isn't the only one. You can see a a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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