HOG: AI Signals Potential Put Buying Opportunity

Harley-Davidson operates through three segments: 'Harley-Davidson Motor Company (HDMC)', 'LiveWire', and 'Harley-Davidson Financial Services (HDFS)'. HDMC designs, manufactures, and sells 'Harley-Davidson' motorcycles, parts, accessories, and apparel globally through independent dealers and e-commerce. It targets riders seeking grand American touring, cruiser, sport, and adventure touring experiences. 'LiveWire' focuses on electric motorcycles and balance bikes, selling to retail partners and directly to consumers under the 'STACYC' brand. HDFS provides wholesale and retail financing, insurance services, and licensing primarily in the U.S. and Canada, supporting the sale of 'Harley-Davidson' and 'LiveWire' motorcycles. The company differentiates itself by offering a complete package of motorcycles, related products, and financial services, fostering a strong brand community through events, digital marketing, and the 'Harley Owners Group (H.O.G.)'.

HOG's technical outlook is bearish. The stock closed at $25.37 on 2025-11-04, significantly below its 50-day SMA of $28.29 and its 21-day EMA of $27.26, indicating a downtrend. The MACD at -0.22 is below its signal line (-0.27), and the MACDh is positive but small, suggesting weak upward momentum that may not persist. The RSI is at 47.75, indicating neutral momentum, but it has been trending downward. The STOCHk is at 39.46, while the STOCHd is at 40.98, suggesting that the stock is not yet oversold, leaving room for further declines. The ADX is low at 11.53, indicating a weak trend. The ROC_20 is positive at 2.15, but this is a lagging indicator and may not reflect current weakness. The recent price action shows a sharp decline, with a close near the low of the day, confirming bearish sentiment. The percent ATR is 3.14, indicating moderate volatility. Given these factors, HOG appears likely to trend downwards over the next 1–3 months.

Harley-Davidson's MD&A reveals a challenging operational landscape. For the three months ended June 30, 2025, 'Net income attributable to Harley-Davidson, Inc.' decreased significantly to $107.6 million, compared to $218.3 million in the same period of 2024. This was primarily driven by a decrease in 'HDMC segment operating income' of $136.6 million. Worldwide retail sales also declined by 15.5%. Revenue from 'Motorcycles' decreased by 27.2% to $778.1 million, and the 'Gross profit' margin for HDMC contracted from 14.7% to 5.9%. For the six-month period, the 'Net cash provided by operating activities' decreased to $509.5 million from $577.6 million in the prior year. The company is facing headwinds from tariffs, estimating a potential impact of $50-$85 million. High interest rates are also impacting consumer discretionary purchases. While the company expects $1 billion in cash to be available after settling HDFS debt and plans to execute $500 million in discretionary share repurchases in the second half of 2025, the overall tone suggests caution due to 'macroeconomic uncertainty' and its impact on consumer demand.

The Harley-Davidson earnings call presents a mixed but cautiously optimistic outlook. The strategic partnership with KKR and PIMCO regarding HDFS is a major highlight, expected to boost HDFS earnings by '$275 million to $300 million in operating income' this year and unlock significant value. Management believes this transaction will 'boost HDFS earnings substantially this year'. While consolidated revenue declined 19% due to a planned reduction in motorcycle shipments and soft demand, there are signs of potential recovery. Global motorcycle retail sales were down 15% year-over-year, reflecting the impact of elevated interest rates. However, there is cautious optimism regarding future trade agreements and the inclusion of Harley-Davidson motorcycles in the recently signed automotive tax reduction legislation. The company is also planning to reduce debt by $450 million and accelerate its share buyback program. Furthermore, the upcoming launch of a new small displacement motorcycle, targeting an entry price below $6,000, aims to tap into a new market segment. While LiveWire continues to focus on reducing cash burn, the overall tone suggests a moderately bullish outlook, driven by strategic financial moves and potential growth initiatives.

Harley-Davidson's (HOG) financial performance presents a mixed picture. Revenue has fluctuated, starting at $1,729.6M in Q1 2024 and declining to -$2,636.3M in Q3 2025. The gross profit ratio has also been volatile, peaking at 38.0% in Q3 2024 but plummeting to -2.2% in Q3 2025, indicating worsening profitability. Operating cash flow has been inconsistent, with a negative $92.6M in the most recent quarter (Q3 2025) compared to a positive $104M in Q1 2024 and $473.6M in Q2 2024, raising concerns about short-term liquidity. Total debt decreased from $7,257.8M in Q1 2024 to $7,026.5M in Q4 2024, then increased to $7,850.4M in Q3 2024, before declining to $6,911.0M in Q2 2025, and then decreasing again to $2,014.0M in Q3 2025. The negative revenue and gross profit ratio in the latest quarter, combined with inconsistent operating cash flow, suggest potential financial strain despite the decreasing debt. Further monitoring is needed to assess the sustainability of these trends.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.