Harley-Davidson: A Fallen Giant Still Trading at Fair Value

The iconic American motorcycle manufacturer Harley-Davidson (HOG) has faced a brutal reckoning in recent quarters, with its stock price plunging to $23.62 by May 2025—a 46% decline from its $44.43 peak in early 2023. Yet, beneath the turmoil, the company’s fundamentals hint at a valuation that may have finally reached equilibrium. With a price-to-earnings (P/E) ratio of just 7.0 and a market capitalization of $2.87 billion, Harley’s stock now trades at levels that reflect its struggles but also leave little room for further pessimism. This article examines whether the selloff has pushed the stock into fair-value territory—or if deeper risks lurk beneath.

The Financials: A Stark Reality, But Not Yet a Write-Off

Harley’s Q1 2025 results underscore the challenges it faces. Revenue plummeted 23% year-on-year to $1.329 billion, driven by a 33% collapse in motorcycle shipments to 38,600 units. North America, its core market, saw retail sales drop 24%, while Asia-Pacific sales fell 28%, reflecting weakening demand in key regions. Net income tumbled 43% to $133 million, with diluted EPS at $1.07—well below the $1.66 consensus estimate. These figures are a stark departure from Harley’s glory days, but they also highlight a critical point: the market has already priced in much of this pain.

The company’s cash position remains a bright spot. With $1.9 billion in liquidity, Harley retains the flexibility to navigate macroeconomic headwinds, repurchase shares (it bought back $87 million worth in Q1), and maintain its $0.18 quarterly dividend. While its P/E ratio of 7.0 suggests the stock is cheap relative to historical multiples, it also reflects the market’s skepticism about Harley’s ability to regain momentum. For context, peers like Polaris (PII) trade at a P/E of 12.3, while industry laggards such as Mullen Automotive have near-zero valuations. Harley’s 7x earnings multiple places it squarely in the “fair value” zone—neither overpriced nor undervalued on a purely quantitative basis.

Valuation Metrics: Cheap, But Not a Bargain

Harley’s valuation metrics are compelling but lack the urgency of a classic “deep value” play. A would show the stock’s decline aligning with its shrinking earnings. At $23.62, the stock trades at 7.0x trailing EPS of $3.37 (annualized from Q1’s $1.07). If we factor in a conservative 2025 EPS estimate of $1.66 (the Q1 miss suggests this could still be optimistic), the P/E expands to 14.2—a level that would still be below its 10-year average of 16.5.

The company’s market cap of $2.87 billion also reflects its diminished scale. In 2023, Harley’s market cap was $5.13 billion; today, it ranks as the 3,615th largest company globally, a far cry from its mid-2000s heyday. Yet, this contraction has not erased all value. Harley’s enterprise value of $9.24 billion, which factors in its $4.96 billion in debt, still leaves room for a turnaround. If motorcycle sales stabilize and LiveWire’s electric division gains traction—despite Q1’s 72% unit sales decline—the stock could rebound.

Strategic Shifts and Risks

Harley’s management is responding to the crisis with a mix of austerity and innovation. Cost-cutting has narrowed LiveWire’s operating loss to $20 million in Q1, down from $29 million in 2024, and the company plans to launch more affordable entry-level cruisers in 2026 to counter declining demand for its high-end models. Meanwhile, a return to fall product launches aims to better align inventory with dealer needs.

Yet, significant risks remain. The reveal a steady decline in demand, with North American sales now 24% below 2024 levels. High interest rates, trade tariffs, and shifting consumer preferences toward electric vehicles (despite LiveWire’s struggles) could prolong the slump. The withdrawal of full-year guidance in Q1 2025 underscores management’s uncertainty about these factors.

Conclusion: Fair Value, But Growth Remains Elusive

Harley-Davidson’s stock is neither a screaming buy nor a sell at current levels. Its P/E ratio of 7.0 and cash-rich balance sheet suggest it is trading at fair value, but investors must weigh this against structural challenges in its core business. The company’s 12.8% 1-year price forecast to $26.65 by May 2026 hints at limited upside, while its five-year projection of $24.01—just 1.8% above current prices—implies stagnation.

The key variables for investors are clear: Can Harley revive motorcycle sales through new product lines? Will LiveWire find its footing in a fiercely competitive EV market? And will macroeconomic conditions improve enough to lift discretionary spending? For now, the stock’s valuation reflects a “wait-and-see” stance. At $23.62, Harley offers little margin of safety for growth investors but provides stability for those willing to bet on its long-term brand resilience and cash flow. The road ahead is uncertain, but the stock’s valuation is no longer a gamble—it’s a measured bet on a storied name’s ability to adapt.