As of yesterday, Harley-Davidson’s (HOG) forward EV[1.enterprise value]-to-EBITDA multiple was 12.3x. It was higher than its multiple of 11.9x six months ago, as well as Japanese auto giant Honda’s (HMC) 6.1x.
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Forward PE multiple
Harley-Davidson’s forward PE multiple was 12.2x, also much higher than Honda’s 7.4x. Harley-Davidson’s valuation multiples are typically higher than those of most legacy automakers and other motorcycle makers. Its claim to the largest share of the US heavyweight and premium motorcycle segments could be one reason for its higher forward valuation.
Ferrari (RACE), whose valuation multiples are also much higher than other auto industry (FXD) players’, has an EV-to-EBITDA multiple of 18.8x. Ferrari’s strong presence in the premium luxury car segment sets it apart from other large auto companies.
What’s been factored in?
In the last three years, Harley’s US motorcycle retail sales haven’t recovered, and the company has struggled to increase its international sales. Also, Harley’s international profit margin is weaker than its US profit margin. These factors could be why analysts expect Harley’s first-quarter earnings to disappoint investors, and these lower estimates may have been factored into its current valuation multiples. Weak first-quarter results could hurt Harley’s future earnings estimates and drive its valuation lower.