MILWAUKEE - Harley-Davidson, Inc. (NYSE: NYSE:HOG), the iconic American motorcycle manufacturer, today revealed a new strategy to repurchase up to $1 billion of its outstanding common stock by 2026.
This buyback program, approved by the company's board, aims to utilize cash generated from operations and will supersede previous repurchase plans. This initiative follows the company's successful completion of $875 million in share repurchases since 2022, emphasizing its commitment to enhancing shareholder value.
The company's Chairman, President, and CEO, Jochen Zeitz, commented on the announcement, stating, "Through both the Rewire and the Hardwire, we have focused on cost efficiency and profitable growth to set the Company up for future success, as demonstrated by more than doubling unit profitability since 2019. As we look ahead, we remain focused on the profitability of our business and deploying our capital efficiently. We expect this will allow us to continue to return cash to shareholders."
Harley-Davidson's strategic approach has been to streamline operations and concentrate on growth areas that would yield higher profitability. The decision to launch a new share repurchase program is a reflection of the company's confidence in its financial stability and future performance.
The announcement of the share repurchase plan is based on a press release statement from Harley-Davidson.
In other recent news, Harley-Davidson has been the focus of multiple developments. The company's Q2 performance raised concerns, leading to a target price reduction by Citi, DA Davidson, and BMO Capital Markets due to weaker-than-expected retail results and an accumulation of older inventory. Harley-Davidson has also declared a second-quarter cash dividend of $0.1725 per share, continuing its tradition of rewarding investors through regular dividend payments.
In addition, the Biden administration has announced nearly $1.1 billion in grants to General Motors (NYSE:GM) and Stellantis (NYSE:STLA) to convert existing plants for electric vehicle production. As part of this initiative, Harley-Davidson is set to receive $89 million to expand its plant in Pennsylvania for manufacturing electric motorcycles.
These recent developments highlight the dynamic market environment and the challenges Harley-Davidson faces. However, the company's commitment to its core customer base and its strong brand loyalty remain evident. The firm's next quarterly financial update will be closely watched for insights into its inventory management and future product strategy.
InvestingPro Insights
As Harley-Davidson (NYSE: HOG) embarks on its ambitious stock repurchase strategy, the company's financial health and market performance come into sharper focus. With a current market capitalization of $4.56 billion, Harley-Davidson trades at an attractive earnings multiple, with a P/E ratio (adjusted for the last twelve months as of Q1 2024) of just 7.15. This could indicate that the stock is undervalued relative to its earnings, aligning with the company's own confidence in its financial stability and the potential for future growth.
InvestingPro Tips suggest that management's aggressive share buyback activity, coupled with a dividend that has been raised for three consecutive years, underscores a commitment to returning value to shareholders. Additionally, the company has maintained dividend payments for 32 consecutive years, signaling a strong track record of shareholder rewards. For investors looking for further insights, InvestingPro offers additional tips on Harley-Davidson, which can be accessed through InvestingPro. There are 6 more tips available, providing a deeper dive into the company's financials and market prospects.
Despite a slight sales decline anticipated for the current year, analysts predict the company will remain profitable. This is further substantiated by the company's solid gross profit margin of 29.1% over the last twelve months as of Q1 2024. Harley-Davidson's liquidity also appears robust, with liquid assets surpassing short-term obligations, which may provide additional flexibility for executing its share repurchase program.
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