Harley-Davidson reported a wider loss in the fourth quarter on Tuesday, hurt by a pullback in consumer spending toward recreational vehicles. ...

Financial Performance - Harley-Davidson reported a diluted EPS of $2.78 for the full year 2025, down 19% from $3.44 in 2024[4]. - Consolidated revenue for 2025 was $4.473 billion, a decline of 14% compared to $5.187 billion in 2024[4]. - HDMC revenue for Q4 2025 was $379.2 million, down from $420.5 million in Q4 2024, with a gross loss of $30.5 million compared to a loss of $3.2 million in the previous year[28]. - LiveWire revenue increased to $11.4 million in Q4 2025 from $10.4 million in Q4 2024, but it reported a gross loss of $0.5 million compared to a loss of $5.6 million in the prior year[28]. - Harley-Davidson Financial Services (HDFS) revenue decreased to $105.6 million in Q4 2025 from $256.7 million in Q4 2024, with an operating loss of $82.2 million compared to an operating income of $46.4 million in the previous year[28]. - Total revenue for the twelve months ended December 31, 2025, was $3,578,308, down from $4,121,906 in 2024, representing a decline of approximately 13.2%[34]. - The company experienced a decrease in motorcycle revenue from $3,137,331 in 2024 to $2,657,675 in 2025, a decline of approximately 15.3%[34]. - Gross profit for the twelve months ended December 31, 2025, was $867, a decrease from $1,155 in 2024, reflecting a decline of approximately 25.0%[36]. Sales and Shipments - Global retail motorcycle sales decreased by 12% year-over-year, totaling 132,535 units in 2025[3]. - HDMC global motorcycle shipments fell by 16% to 124,477 units in 2025[3]. - U.S. motorcycle shipments for the twelve months ended December 31, 2025, were 77,982 units, a decrease of 17.0% compared to 94,075 units in 2024[34]. - Total worldwide retail sales for the twelve months ended December 31, 2025, were 132,535 units, down from 151,229 units in 2024, indicating a decrease of about 12.4%[40]. - The company expects HDMC global motorcycle retail sales to be between 130,000 to 135,000 units in 2026[3]. Shareholder Returns - Harley-Davidson returned $434 million to shareholders through share repurchases and dividends in 2025[3]. Cash and Liquidity - Harley-Davidson's cash and cash equivalents stood at $3.1 billion at year-end 2025[18]. - Cash and cash equivalents rose significantly to $3.09 billion in 2025 from $1.59 billion in 2024, indicating improved liquidity[30]. - Total current assets increased to $5.59 billion in 2025 from $4.99 billion in 2024, while total liabilities decreased to $2.66 billion from $3.56 billion[30]. - The company reported a total shareholders' equity of $3.16 billion in 2025, slightly down from $3.16 billion in 2024[30]. - Net cash provided by operating activities for the twelve months ended December 31, 2025, was $568,922, a decrease from $1,063,833 in 2024[32]. - The company reported a net cash used by financing activities of $(3,010,300) for the twelve months ended December 31, 2025, compared to $(572,315) in 2024, reflecting increased financing activity[32]. Strategic Outlook - The company plans to announce a new strategic plan in May 2026, which may impact future figures[3]. - Harley-Davidson's ability to manage supply chain issues and tariffs remains critical for future performance, especially in light of geopolitical tensions and inflationary pressures[21]. - The company aims to enhance its brand value and manage risks associated with market conditions and consumer preferences[21]. - Future strategies include optimizing capital allocation and managing the impact of climate change regulations on operations[22]. Credit Loss Management - The provision for credit losses for the twelve months ended December 31, 2025, was $(191,392), compared to $247,225 in 2024, indicating a significant change in credit loss management[38]. LiveWire Performance - LiveWire's electric motorcycle shipments increased by 61% to 381 units in Q4 2025[13].

Core Insights - Harley-Davidson, Inc. (HOG) is facing multiple challenges including tariff impacts, a secular decline in the motorcycle market, an aging customer base, and declining market shares [1] - The company's stock is heavily shorted and is considered extremely undervalued, even for a company in its current situation [1] Company Analysis - The motorcycle manufacturer is experiencing a significant decline in market shares, which is a concern for its long-term viability [1] - The aging customer base indicates a potential issue with attracting younger riders, which could further exacerbate the decline in sales [1] Investment Perspective - The analysis suggests that despite the challenges, there may be potential investment opportunities due to the stock being undervalued [1] - The company has a history of notable stock performance in other investments, indicating a focus on value names with strong downside protection [1]

Group 1 - Harley-Davidson, Inc. will release its fourth quarter and year-end 2025 financial results on February 10, 2026, before market hours [1] - An audio webcast will be held from 8-9 a.m. CST, where senior management will discuss financial results, business developments, and the company's outlook [1] - A slide presentation supporting the discussion will be available prior to the audio webcast [1] Group 2 - Participants are encouraged to log-on and register at least 10 minutes before the start time [2] - A replay of the audio webcast will be available approximately two hours after the call concludes [2] Group 3 - Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services [3]

Core Viewpoint - Harley-Davidson is facing challenges due to muted demand trends and tariff pressures, prompting a strategic shift towards more affordable motorcycle models aimed at younger consumers [2][3][5]. Group 1: Demand Trends and Market Outlook - Morgan Stanley has cut its price target for Harley-Davidson from $21 to $18, maintaining an Underweight rating, citing muted demand trends in gaming, lodging, and leisure for 2025 [2]. - The firm anticipates that the demand landscape will remain fundamentally unchanged into 2026, although interest rate dynamics may influence consumer spending patterns [2]. Group 2: Strategic Shifts - In response to cooling demand, Harley-Davidson plans to tighten inventory levels and focus on more affordable motorcycles, moving away from its traditional reliance on higher-income customers and high-margin custom cruisers [3]. - The company is set to launch a new "Sprint" model in 2026, with a starting price below $6,000, targeting younger buyers who seek a fun yet serious riding experience [4]. Group 3: Tariff Impact - Harley-Davidson reported a $27 million tariff charge for the quarter, an increase from $13 million in the previous quarter, as it navigates the impact of U.S. tariffs on critical imports [5]. - The company has narrowed its expected annual tariff impact to a range of $55 million to $75 million, down from an earlier estimate of $50 million to $85 million, indicating ongoing challenges in retail demand [5].

Core Insights - Harley-Davidson (HOG) is focusing on high-potential markets in North America, Europe, and select Asia-Pacific regions while facing challenges from rising tariffs, cost inflation, and poor operating leverage [1] Financial Strategies - Long-term strategic partnerships with KKR and PIMCO are expected to enhance Harley-Davidson Financial Services (HDFS) and improve capital structure, with projected discretionary cash of $1.2-$1.25 billion to be unlocked by Q1 2026 [2] - The significant cash inflow could be utilized for debt reduction (targeting $450 million), accelerating buybacks ($200 million ASR under a $1 billion repurchase program through 2026), or funding targeted product and dealer initiatives [3] Operational Efficiency - The revamped operating model and streamlined organizational structure have improved efficiency across all functions, with a focus on high-potential regions after exiting unprofitable markets [4] - The company aims to strengthen market position while driving productivity and reducing supply-chain costs, emphasizing sportier bikes and modern marketing techniques [5] - Cost regulation is a key component of the multi-year productivity cost program, aiming for $400 million in improvements by 2025, with $257 million in unlevered productivity savings realized from 2022 to 2024 [6] Debt Management - As of September 30, 2025, Harley-Davidson's long-term debt was $3.1 billion, down from $4.5 billion at the end of 2024, with a long-term debt-to-capital ratio of approximately 0.46, providing greater financial flexibility [7] Market Challenges - Tariffs are compressing gross margins, with HDMC's gross margin declining to 26.4% in Q3 from 30.1% the previous year, costing $27 million in the quarter and projected to reach $55-$75 million for full-year 2025 [8] - Unfavorable operating leverage and cost inflation pressures are expected to continue affecting profitability, leading to withheld 2025 guidance due to tariff and trade-policy uncertainty [9] Inventory Issues - Global dealer motorcycle inventories are down 13% year-over-year, with concerns primarily in Touring and CVO inventories, prompting targeted promotions to move stock [11]

Group 1: Market Overview - The consumer discretionary sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1] - An asset is considered oversold when the Relative Strength Index (RSI) is below 30, which helps traders gauge short-term performance [1] Group 2: Company Highlights - Best Buy Co Inc (NYSE:BBY) reported better-than-expected third-quarter results with a 2.7% growth in comparable sales, despite a stock decline of around 12% over the past month and an RSI of 24.4 [6][3] - Harley-Davidson announced new executive appointments aimed at enhancing engagement with riders and dealers, with a stock decline of approximately 14% over the past month and an RSI of 27.9 [6][4] - Advance Auto Parts Inc (NYSE:AAP) saw a significant stock drop of about 25% in the last month, with an RSI of 29.2, following a price target reduction by an analyst [6][5]

Core Insights - The consumer discretionary sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1] Company Summaries - **Best Buy Co Inc (NYSE:BBY)**: Reported better-than-expected Q3 financial results with a 2.7% growth in comparable sales. The stock has fallen approximately 12% in the past month, with a 52-week low of $54.99. Current RSI value is 24.4, and shares closed at $67.84, down 2.5% [6][3] - **Harley-Davidson**: Recently appointed new executives to enhance operations and engagement with customers. The stock has decreased around 14% over the past month, reaching a 52-week low of $20.45. Current RSI value is 27.9, and shares closed at $20.82, down 0.9% [6][4] - **Advance Auto Parts Inc (NYSE:AAP)**: Analyst Greg Melich maintained an In-Line rating but lowered the price target from $58 to $56. The stock has dropped about 25% in the last month, with a 52-week low of $28.89. Current RSI value is 29.2, and shares closed at $39.87, down 3.4% [6][5]

Core Thesis - Harley-Davidson, Inc. is viewed as a deep-value investment opportunity, trading below tangible book value, indicating that the market assigns little value to its strong brand presence in the motorcycle industry [2][3]. Company Overview - Founded in 1903, Harley-Davidson is a key player in American motorcycling culture, known for its strong brand loyalty [3]. - The company's stock is currently trading at $21.25, with trailing and forward P/E ratios of 5.09 and 6.76 respectively [1]. Valuation Insights - The current market valuation suggests that Harley-Davidson's intangible assets, including its brand and financing arm, are being valued at nearly zero, reflecting investor pessimism rather than the company's intrinsic worth [3]. - A sum-of-the-parts analysis indicates that the intrinsic value of Harley-Davidson could approach the low-$30s per share, suggesting a potential upside of over 50% [7]. Challenges Faced - The company's valuation discount is attributed to both self-inflicted challenges, such as past management decisions and a shift in focus towards younger demographics, and external macroeconomic pressures like high interest rates and weak consumer sentiment [4][5]. - Recent leadership changes are aimed at refocusing on core operations and profitability, which may help address these challenges [5]. Strategic Moves - Harley-Davidson's decision to sell a 10% stake in Harley-Davidson Financial Services (HDFS) has raised investor concerns, but this move is seen as a way to de-risk the business while maintaining operational control [6]. - The transaction, which transfers $4 billion of loans off the balance sheet, is expected to bring in institutional investors like KKR and PIMCO, validating the value of HDFS [6].

Imagine at Harley-Davidson it must have been uh unique to have a woman as CFO, right. >> I've had the good fortune in all of the stops I've had along the way where my bosses have prioritized that diversity of of of thought. >> Noticed also that a lot of [music] people who work here seem to also play the games.You know, they live in this culture. And I must that must have been the same at Harley, right. >> At Harley, you're right.I wasn't a rider, but I'm from [music] Milwaukee. Uh, I learned how to ride. An ...