American Motorcycle Dealer AMD 203 June 2016 | Page 4

Harley’s share price woes now only
underlying reality of what is ha
n the four months following
Harley-Davidson’s full-year
2015 financial results
announcement in January,
their share price has fluctuated
wildly, with no apparent
explanation for the stock market’s
uncertainty than just exactly that
– uncertainty.
Uncertainty as to whether or not
current pricing represents value or risk,
uncertainty about whether the program
of initiatives undertaken since October
2015 are sufficient to turn the
company’s fortunes around, and
uncertainty as to whether the company
has got what it takes in its locker to
affect a long-term response to the
issues it faces.
Yes, those issues have included foreign
exchange trends over which no
individual business has control, and
include the reasonably frequent spasms
of (often China inspired) jitters that
appear to be the defining characteristic
of Wall Street so far in 2016.
There’s no doubt that wider economic
uncertainties remain a concern, and
that in a US election year, and this of all
US election years, the only certain thing
about those uncertainties is that they
are not going to go away any time
soon. The only adjective that accurately
and fairly characterizes the global
economy is “fragile”.
The primary benchmarks against which
Harley-Davidson’s issues can be judged
aren’t so much the performance of the
stock exchange as the performance of
the international motorcycle market
itself.
With the international motorcycle

I

This 10 year view of Harley's stock price takes in the pre-recessionary all-time high in November 2006, the height-ofrecession low of March 2009, the impressive recovery seen by April 2014, and the uncertain trading since then

market generally showing growth in
most sectors, especially among the
higher value, higher horsepower units
that are doing well in developed
markets such as North America and
Europe, then given the instability of
stock markets, this is a way superior
background against which to calibrate
the realities of Harley’s fundamentals and by any measure that analysis
throws the company’s travails into even
starker relief than the doldrums of its
P&L and Wall Street performance does.
I am writing this towards the end of
May, and as at May 23rd Harley’s share
price stood at $44.23. This is a down to
the $51.66 it hit at the start of April,

but still up on the substantial
improvement on the $37.49 it hit
around the end of January following
their 2015 full-year financial
statements.
That said, when put in the context of
the $55,41 it was at just before their
2015 Q3 financial statements
announcement in October last year, and
the $59.79 12-month high it was at
just before their less than galvanizing
MY 2016 announcements in August
2015, it is clear that the investor
community remains distinctly uninspired

by what it is seeing.
However, further context comes in the
surprisingly weak performance of
Polaris Industries’ share price over the
same period. It is currently trading at
$82.21, following a steady decline from
a 12-month high of $153.49 in July
2015 – indeed Polaris’ all-time high
share price was in the region of
$157.00 as recently as November
2014.
So, it would appear that both
companies have been hit by,
presumably, similar issues – weakness

‘global economy remains fragile’