Harley-Davidson's business has been cruising for the past decade and has spit out consistently strong results every mile along the way. The company's most recent quarterly results were not an exception; the quarter was as strong as a leather belt. Sales rose 24% to $755 million and earnings revved up a mean 32%. With that kind of growth and with the company's past consistency, at least consider Harley's free dividend reinvestment plan.

By Vince Hanks
July 27, 2000

If I had to choose one word to describe Harley-Davidson's (NYSE: HDI) business performance over the past decade, the word that immediately comes to mind is "cruising." In fact, the motorcycle giant has been trekking along on cruise control for so long, its incredible results are not only unsurprising, they're generally barely noticed as outstanding. Another quarter rolls by, another batch of record numbers are logged. Fourteen consecutive years of record sales and earnings. Ho-hum.

While the company's year-after-year results may be lost in the muffle of predictability, shareholder's have not missed experiencing the classic "vroom" of the V-Twin engine. Whether it's the product, the business, or return on investment, Harley-Davidson is all about performance. This is simply a finely tuned, lean, mean financial machine.

A few short weeks back, the company announced yet another record quarter. Sales reached $755 million, an increase of 24% over the year-ago period. Earnings grew to $90.6 million, 32% above last year and 7.4% above analysts' estimates, despite a pretax hit of $3 million due to a Buell bike recall. Shipments of Harley-Davidson motorcycles were up 19% and Buell model shipments rose 117%.

These results are not at all unusual. Earnings have grown by at least 20% in each of the past 10 years except for one, in 1995, when they rose 19.35%. Margins are in equally fine shape, with gross margins down slightly to 34% due to weakening European currencies and a higher mix of lower-margin products such as the Buell cycle line and general merchandise. Although dipping a bit this quarter, the trend over recent history is in the proper lane, marked by an improvement over the past eight years from the high 20s to the now very respectable mid-30s in gross margin percentage. Net margins are in Fat Boy territory, weighing in at 11.4%.