Harley-Davidson: Strong Quarter, Hardwire Plan Poised For Success (NYSE:HOG)

Harley-Davidson: Strong Quarter, Hardwire Plan Poised For Success (NYSE:HOG)

gokhanilgaz An iconic name in the motorcycle industry for over 100 years, Harley Davidson (NYSE:HOG)

Harley-Davidson: Strong Quarter, Hardwire Plan Poised For Success (NYSE:HOG)


An iconic name in the motorcycle industry for over 100 years, Harley Davidson (NYSE:HOG) operates in over 50 international markets. The famous motorcycle company reported earnings this morning that had Wall Street in a buying frenzy.

Harley Davidson is currently up 11.5% as of this writing, beating top and bottom-line estimates.

Data by YCharts

What Went Right?

Harley Davidson beat EPS estimates by $0.39, posting $1.78 in per-share earnings for the third quarter. On the top line, HOG grew its revenue by 20.4% to $1.65B.

Harley Davidson operates in two reportable segments: HDMC (motorcycles) and other related products (financial services)

HOG’s revenue increase was primarily driven by an increase in motorcycle shipments after the company was forced to suspend production due to a regulatory compliance matter with a third-party supplier.

The below table shows Harley’s motorcycle division’s revenue. Aside from P&A declines due to lower volumes, all other segments demonstrated robust YoY growth, contributing to the 24% YoY segment revenue increase.




24 %




28 %

Parts & Accessories



(2 %)




41 %




26 %




74 %


Similar to Q1 and Q2, Harley reaffirmed its 2022 guidance revenue and operating income/margin guidance for the full year. However, the company mentioned that capital investments would decrease to $170-$190 million from the previous range of $190-$220 million.

Are Prior Difficulties In The Past?

From 2013-2020, Harley Davidson went through some difficult financial times with revenue and profits.

2013 2014 2015 2016 2017 2018 2019 2020
5,258.3 5,567.7 5,308.7 5,271.4 4,915.0 4,968.6 4,572.7 3,264.1
734 844.6 752.2 692.2 521.8 531.5 423.6 1.3

In the graph below, it is clear shareholders in this period have not been rewarded, as the stock significantly underperformed the market.

Data by YCharts

In March 2020, ex-Puma CEO Jochen Zeitz took over from Matt Levitech, who served as CEO from 2015-2020.

As depicted below, Levatich’s tenure as CEO resulted in poor shareholder returns.

Data by YCharts

Struggles In Core Market

Despite the revenue increase for Harley Davidson, retail motorcycle sales are down in all markets excluding Asia-Pacific. However, CFO Gina Goetter emphasized that this shouldn’t be a long-term theme.

Global retail sales of new motorcycles were down 2% in the quarter. Overall, retail results were negatively impacted by low dealer inventory heading into Q3 and remaining lean through the first half of the quarter. As Jochen pointed out, as the quarter went on, we saw overall retail return to growth year-over-year, as inventory began to flow more normally into the dealer channel.

Despite this, a long-term trend depicts a slight decrease in market share within the core US market dating back to 2015.

2015 2016 2017 2018 2019 2020 2021
50.2% 51.2% 50.7% 49.7% 49.1% 42.1% 44.5%

Is The 5-Year Hardwire Plan Legit?

In May 2020, Zeitz announced a 5-year Hardwire plan spanning 2021-2025, following its Rewire plan in 2020 to set the company on a new course.

The Hardwire plan is a six-pillar approach to improve the business over the next 5-years.

Harwire Plan

Investor Presentation

While Harley has improved its profitability and immersed itself into the electric bike space with an 89.4% stake in LiveWire (LVWR), time will only tell whether the five-year plan will pan out.

So far, things look promising for Harley to execute its Hardwire strategy.

  • Harley Davidson achieved exceptional profitability in the quarter and beat analyst expectations. Further, Harley’s focus on unit profitability has returned to historically healthy levels.

Unit Profitability

Investor Presentation

  • Harley also increased its shipments in Q3 after its Q2 suspension
  • With a focus on leading electric, Harley’s controlling stake in LiveWire poises the company for long-term success in the EV market. Management also noted that in Q4 there will be further LiveWire updates for shareholders.
  • With its commitment to achieving growth beyond bikes, Harley witnessed revenue growth across Apparel and Licensing, offsetting the slight loss in Parts & Accessories.


All in all, Harley trades for a very reasonable 9x earnings.

Data by YCharts

Trading below its historical 5-year PE ratio average, Harley appears to offer shareholders upside with a 10.27x earnings multiple.

Factoring in its focus on profitability, selective expansion, and leading electric, 10x earnings is a cheap price to pay for the strongest brand names in the motorcycle industry.


With a strong brand name and a strong quarter, Harley appears poised to achieve its 5-year Hardwire plan under the leadership of veteran CEO Jochen Zeitz. With a more than acceptable valuation (earnings multiple), I will initiate a buy recommendation on Harley Davidson.