HOG

Harley screens cheap (8.7x EPS, 0.8x sales, net cash) but the cheapness masks a deteriorating, low-quality earnings stream. Revenue has fallen every year since the 2022 peak — $4.93B → $3.60B — and FY2025 alone was down 13.1% with net income down 25.6% and diluted EPS down 19.2%. The deterioration is structural, not just cyclical: worldwide dealer retail unit sales fell 12.4% (US -12.9%), reflecting an aging core demographic buying premium discretionary product into 'high interest rates and depressed consumer sentiment.' This is a shrinking franchise, not a stumbling one.

The most important number is one the headline P/E hides: the core HDMC motorcycle segment swung to a $28.7M operating LOSS in 2025 from $277.8M of operating income in 2024, hit by 'unfavorable manufacturing leverage' as fixed costs are spread over collapsing volumes. Consolidated operating income held up (only -7.2%) ONLY because HDFS finance-segment operating income jumped to $490.4M from $248.4M — and the MD&A attributes that jump 'primarily to a release of the allowance for credit losses on receivables sold as part of the HDFS Transaction,' i.e. a one-time, non-repeatable gain plus debt-extinguishment costs. Strip that out and the underlying enterprise lost money making motorcycles. EPS is further flattered by a 10.2% reduction in share count from $353M of buybacks. Operating cash flow tells the cleaner story: down 46.5% to $569M.