Harley-Davidson Inc (NYSE:HOG)’s business is predicted to decline -0.1% during the next year. What are the important facts you need to know? In this article we will analyse the latest data and future performance of this growth stock in more detail. View our latest analysis for Harley-Davidson
Troubled times ahead?
HOG is covered by 17 analysts who by consensus are expecting a 13% increase in earnings over the next 3 years. That means that we can be expecting the EPS to grow to $ 4.49 levels.
This means earnings will be above what has been seen in the past few years.
In the same period revenue is expected to reduce slightly from $ 6.00 Billion M to $ 5.82 Billion M in 2020 and profit is predicted to escalate from $ 692 Million to $ 782 Million in 2020, roughly growing 1.1x. Margins are predicted to be a respectable 13.4% during this time as well.
Is there any basis for growth?
Harley-Davidson has grown its earnings faster than the Automobiles industry average but that itself is not a very big accomplishment seeing as the industry has been struggling in the past year.
HOG has been performing remarkably well with a Return on Equity of 36.8%. This is above the Automobiles average of 23.45%. This is expected to improve in 3 years to an impressive ROE of 45.4%.
Return on equity (ROE) is a measure of how much profit (net income) a company makes as a percentage of the shareholders equity. Equity is made up of funds from the original issuing of shares and any retained earnings from previous financial years. It varies considerably across sectors, for this reason it is important to asses a stocks ROE relative to its industry. Whilst it is true that the higher the ROE the better the company is performing, ROE does have a weakness. A stock with a disproportionate amount of debt can lead to a small equity base. Thus, a small amount of net income (the numerator) could still produce a high ROE off a modest equity base (the denominator). For this reason investors should always consider the debt situation in conjunction with ROE.
Harley-Davidson may have a few turbulent years in front of it but despite (or maybe because of) that it could still be offering an interesting investment opportunity. I recommend you see our latest FREE analysis to find out!
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