Harley-Davidson Increases Dividend: Analyzing the Stock's Future

Harley-Davidson (HOG - Free Report) has recently announced a cash dividend of 18 cents per share for the first quarter of 2025, marking a 4.3% increase from the previous dividend of approximately 17 cents per share. This dividend, which presents a forward yield of 2.8%, is set to be paid on March 14, 2025, to shareholders recorded as of February 28, 2025.

The increase in the dividend showcases HOG's financial stability and its commitment to providing returns to shareholders. This boosted payout is likely to uplift investor confidence and enhance the stock’s performance.

However, it’s important to note that Harley-Davidson's shares have declined by 30.7% over the past twelve months, lagging behind the Zacks Auto-Tires-Trucks sector, which has shown an appreciation of 11.3%, and the Zacks Automotive – Domestic industry, which has returned 25.9%. In contrast, the S&P 500 index has surged by 23.2% during the same time frame.

In addition, Harley-Davidson has underperformed compared to industry peers such as General Motors (GM - Free Report), Blue Bird (BLBD - Free Report), and Rivian Automotive (RIVN - Free Report). GM and BLBD stocks gained 20.6% and 14% respectively, while RIVN saw a decrease of 23.7% in the same twelve months.

Harley-Davidson's sales have been impacted by decreasing volumes in various regions and falling profit margins, contributing to a tepid forecast for 2025.

Performance Over the Past Year

Given the current economic landscape, should investors decide to hold onto their HOG stock, or is it time to sell? Let’s explore this question further.

HOG's Growth Driven by Innovation and Market Expansion

Harley-Davidson is fortifying its market presence through an innovative and expanding product line. The launch of the ‘24 Street Glide and Road Glide models has driven almost a 5% increase in sales in the United States. The Touring segment in 2024 shows that HOG's market share has reached nearly 75%, the highest level since 2019.

The company recently launched six new cruiser models along with updates to the Sportster S and Pan America 1250 ST adventure motorcycle. These advancements are designed to enhance HOG's competitive stance and attract a wider range of riders.

Moreover, HOG's brand expansion and strategic marketing initiatives are helping to fuel growth. Collaborations with Champion and the introduction of custom apparel lines have increased brand visibility and customer engagement. These efforts have borne fruit, as HOG secured significant achievements in the Africa Eco Race and the Super Hooligan Championship.

The company’s LiveWire division, focused on electric bikes, is also increasing Harley’s footprint in this fast-evolving market. The LiveWire One and Del Mar models have contributed to a 46% increase in global retail sales year-over-year in 2024, helping maintain a 65% market share in the U.S. 50+ horsepower electric vehicle segment.

Value of HOG Shares

Currently, HOG shares appear undervalued, reflected by a Value Score of A. The stock is trading at a forward 12-month price/sales ratio of 0.79x, which is notably lower than the broader sector average of 1.48x.

Prospects for 2025

Looking ahead, HOG anticipates its retail sales for 2025 to remain flat, expecting improved performance in the latter half of the year. The company predicts a 5% decline in wholesale shipments as it addresses dealer inventory levels. By the end of 2025, global inventory levels are expected to drop by over 10%, with a steep 30% reduction anticipated during the first half of the year.

Projected revenues for Harley-Davidson Motor Company (HDMC) are expected to remain flat or decrease by 5%. Harley-Davidson Financial Services (HDFS) forecasts a 10% to 15% decline in operating income attributed to higher borrowing costs and reduced lending activity. Challenges such as decreased sales volume, currency fluctuations, and an unfavorable product mix shift are anticipated to negatively affect profit margins.

HOG's earnings per share (EPS) forecast for 2024 is expected to remain flat or fall by 5%, influenced by higher tax burdens, reduced interest income, and diminished pension gains.

The company plans to make capital investments ranging from $225 million to $250 million in 2025.

Analyst Estimates for HOG

The Zacks Consensus Estimate projects Harley-Davidson's total revenue for 2025 at $4.14 billion, representing a slight year-over-year decline of 0.14%. The consensus estimate for 2025 EPS currently stands at $3.44, reflecting an 18.1% decrease over the past 30 days, suggesting flat growth compared to the previous year.

In recent quarters, HOG has managed to surpass the Zacks Consensus Estimate for earnings three times out of the last four, with an average surprise of 1.11%.

Should You Buy, Sell, or Hold HOG Stock?

Despite the strong innovation and expansion efforts from Harley-Davidson, the company’s lackluster outlook for 2025 and declining estimates for earnings indicate a need for caution regarding the stock.

Currently, HOG has a Zacks Rank of #3 (Hold), suggesting it may be prudent to wait for a better entry point before accumulating shares of the company.

Harley, Dividend, Stock