1. Equity Research on Harley Davidson
Fundamental, Ration Analysis & Valuation
By:
T.Nishanth,
D.Immanuel,
Students at IIT-Madras.
Disclaimer: The information and views are reliable, but responsibility for errors of facts and opinions. Users have
the right to choose the product that suits them.

2. About the company!!!
• Company Name: Harley-Davidson, Inc.
• Ticker: NYSE: HOG
• Headquarters: Milwaukee, Wisconsin, United States
• Year of Incorporation: 1981
• Year of IPO: 1986
• Number of share outstanding(as of Sept 2016): 178,797,243.00
• Industry: Motorcycles and Related Products Segment
• Chief Executive Officer: Matthew S Levatich

3. Products & Revenue
68.8%
14.4%
4.9%
0.4%
11.5%
Motor Cycles Parts & Accessories General Merchandise Others Financial Services

4. Market Regions
63.6%
3.7%
4.2%
13.9%
2.4%
12.2%
USA Canada Latin America Europe Middle East and Africa Region Asia Pacific Region

5. Fundamental Analysis

6. PEST Analysis
Political Factors
• Free trade agreements
• Increasing support for e-commerce
• Considering HD as the American icon thereby the
opportunities in India and China are reducing.
• The environmental protection laws create on additional
pressure for companies
• Improving inter-governmental support for patent
protection
Economic Factors
• Harley Davidson is the largest manufacturer of
heavyweight motorcycles in the world by market share,
capturing half the U.S. market and a third of the global
market
• Increase in prices of key raw materials in manufacturing
• Economic stability of major markets
• Economic growth of developing countries
• Stable credit accessibility
Social Factors
• The changes in the lifestyle of the majority of youth
population the world-over has resulted in an enhanced
business for Harley Davidson
• The U.S. veteran population has increased by 1.2% ,
Veterans tend to be motorcycle owners so sign of
market segment growth for Harley
• New interests from different demographic groups
outside US
• Increasing involvement of women in chopper biking
Technological Factors
• HD is one of the main manufacturer and user of V-
engine configuration
• They have wide variety of products according to
Standard performance, touring and custom
• Increasing use of computing technology in vehicles
• Computer-based inventory control systems could play a
role in managing motorcycle inventories
• Technology also impacts design

7. Competitive
Rivalry
(High)
Bargaining
power of
buyers
(Low)
Bargaining
power of
suppliers
(Moderate)
Threat of
Substitutes
(Moderate)
Threat of New
Entrants
(Moderate)
Porter’s
Five Forces

8. SWOT ANALYSIS(Internal)
Strengths:
• Strong market position and brand image
• Only American motorbike manufacturer
• Built on trust and respect with suppliers
and dealers
• Strong base of loyal customers
Weakness:
• Poor credit rating(BBB+)
• Limited supply chain
• Narrow product mix
• Declining financial performance
Opportunities:
• Can expand market in developing
countries
• Product diversification
• Alliances with complimentary businesses
Threats:
• Aggressive competition
• Imitation
• Increasing preference for electric vehicles

10. Liquidity Ratios
Current Ratio:
• Measures company’s ability to pay short-term &
long-term obligations
• Current Ratio = (Current Assets)/(Current Liabilities)
• Harley Davidson has the best ratio when compared
with its major competitors, but the ratio has been
reducing over the years. 1.14
1.42
1.45
1.65
1.59
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8
HONDA
SUZUKI
HD(FY 2015)
HD(FY 2014)
HD(FY 2013)
Current Ratio

11. Profitability Ratios
Return on Equity(ROE):
• ROE is a measure of how well a company uses
investments to generate earnings growth.
• ROE = (Net Income)/(Shareholder’s Equity)
• Harley Davidson has the has the highest ROE,
which implies that the company is very effectively
using the shareholder’s money. 0.05
0.1
0.41
0.29
0.24
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45
HONDA
SUZUKI
HD(FY 2015)
HD(FY 2014)
HD(FY 2013)
ROE

12. Profitability Ratios
Net Profit Margin:
• Net Profit Margins show how much of each dollar
collected by a company as revenue translates into
profit.
• Net-Profit Margin = (Net Income)/(Total Sales)
• Harley Davidson has the highest ROA, which is a
good indication of higher profits than its
competitors. 0.03
0.04
0.13
0.14
0.12
0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16
HONDA
SUZUKI
HD(FY 2015)
HD(FY 2014)
HD(FY 2013)
Net Profit Margin

13. Market Value Ratios
P/E Ratio :
• Price-Earnings ratio (P/E Ratio) is the ratio for
valuing a company that measures its current share
price relative to its per-share earnings.
• P/E Ratio = (Market Value per Share)/(Earnings per
Share)
• Harley Davidson has the lowest P/E ratio, implies
HD gives same amount of earnings as it’s
competitors for lower price.
15.49
14
13.77
12.5 13 13.5 14 14.5 15 15.5 16
HONDA
SUZUKI
HD
P/E

14. Valuation
• Beta of HD = 1.19
• With the terminal growth rate of 5% & Discounted rate of 19.86%,
the intrinsic value of the share is $ 26.79
• The HD stock is currently trading at $50
• Therefore stock is highly OVERVALUED
• Call: SELL

15. Thank You
• Immanuel
• Nishanth