With the leaves changing colors, it'd be nice to hop on a Harley and take a long road trip through the Vermont countryside. But are Harley Davidson's (NYSE:HOG) shares these days worth taking for a long ride?
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Sure the economy is improving and it seems as if we have a little more money to spend these days. But how many of us are going to take that money and spend it on an expensive motorcycle? Relatively few, as home appliances and the family car will most likely see some of that money first. As an aside, both Lowe's (NYSE:LOW) and Home Depot (NYSE:HD) look very promising. Of course, longer-term, as the economy rebounds with force, the demand for motorcycles along with other things will pop.
Earnings Just Down the Road
As far as earnings go, Wall Street expects Harley to earn 61 cents per share this year. That means that the company trades at more than 35-times this year's estimate. On the plus side, analysts expect the company to grow a great deal from this year to next. In fact, in 2010, analysts are looking for the company to earn $1.30 per share.
Some data indicates that Harley hasn't had a mint track record as far as meeting expectations is concerned in recent quarters. A quick look at data on Yahoo! Finance shows that it's missed expectations for four quarters straight.
Harley is expected to release its third-quarter numbers in the middle of the month, and Wall Street is expecting it to earn 21 cents. The company may meet that number, but don't expect an upbeat outlook from management about the remainder of the year.
The Bottom Line
Harley could be a great stock to own at some point, but just not now. The near-term demand for its bikes isn't likely to be strong, and the shares are overly expensive. (For another take, read Analyst Forecasts Spell Disaster For Some Stocks.)
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