Critical Contrast: Harley-Davidson (HOG) versus Arctic Cat (NASDAQ:ACAT)
Harley-Davidson (NYSE: HOG) and Arctic Cat (NASDAQ:ACAT) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitabiliy and dividends.
Volatility and Risk
Harley-Davidson has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Arctic Cat has a beta of 1.76, meaning that its share price is 76% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Harley-Davidson and Arctic Cat, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Harley-Davidson presently has a consensus price target of $56.14, indicating a potential upside of 6.94%. Arctic Cat has a consensus price target of $17.42, indicating a potential downside of 5.86%. Given Harley-Davidson’s stronger consensus rating and higher probable upside, equities analysts plainly believe Harley-Davidson is more favorable than Arctic Cat.
Valuation and Earnings
This table compares Harley-Davidson and Arctic Cat’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Harley-Davidson||$5.75 billion||1.61||$1.18 billion||$3.51||14.96|
Harley-Davidson has higher revenue and earnings than Arctic Cat. Arctic Cat is trading at a lower price-to-earnings ratio than Harley-Davidson, indicating that it is currently the more affordable of the two stocks.
This table compares Harley-Davidson and Arctic Cat’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Harley-Davidson pays an annual dividend of $1.46 per share and has a dividend yield of 2.8%. Arctic Cat does not pay a dividend. Harley-Davidson pays out 41.6% of its earnings in the form of a dividend. Arctic Cat has raised its dividend for 6 consecutive years.
Insider and Institutional Ownership
87.0% of Harley-Davidson shares are held by institutional investors. Comparatively, 99.5% of Arctic Cat shares are held by institutional investors. 0.7% of Harley-Davidson shares are held by company insiders. Comparatively, 2.7% of Arctic Cat shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Harley-Davidson beats Arctic Cat on 9 of the 14 factors compared between the two stocks.
Harley-Davidson Company Profile
Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company operates in two segments: the Motorcycles & Related Products (Motorcycles) and the Financial Services. The Motorcycles segment consists of HDMC, which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles, as well as motorcycle parts, accessories, general merchandise and related services. The Company manufactures and sells at wholesale cruiser and touring motorcycles. The Financial Services segment consists of HDFS, which provides wholesale and retail financing and insurance-related programs to the Harley-Davidson dealers and their retail customers. HDFS is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans for the purchase of Harley-Davidson motorcycles.
Arctic Cat Company Profile
Arctic Cat Inc. (Arctic Cat) designs, engineers, manufactures and markets snowmobiles and all-terrain vehicles (ATVs) and recreational off-highway vehicles (side-by-sides or ROVs), as well as related parts, garments and accessories (PG&A). The Company offers its products under the Arctic Cat and MotorFist brand names. The Company operates through two segments: snowmobile and ATV/ROV, and PG&A. The Company produces a line of snowmobiles, consisting of approximately 60 models, marketed under the Arctic Cat brand name. Its ATVs line includes approximately 30 models. The Company offers a total of approximately 16 models under ROVs. The Company provides Arctic Cat Snowmobile, ATV and ROV parts, garments and accessories. It markets its products through a network of independent dealers located throughout the United States, Canada and Europe, and through distributors representing dealers in Europe, Russia, South America, the Middle East, China, Asia and other international markets.
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