HARLEY-DAVIDSON, INC. (HOG) stock intrinsic value fair value estimate & owner earnings analysis

Harley-Davidson is three businesses under one roof: the motorcycle manufacturer (Harley-Davidson Motor Company), the electric-motorcycle unit LiveWire, and the finance arm Harley-Davidson Financial Services (HDFS). We value them separately, then add the parent company's spare cash and subtract its debt. Our earlier estimates for this company were built on a different basis and are not comparable with these figures. The motorcycle side. Motorcycle and related-products revenue fell from $4.93 billion in 2022 to $3.60 billion in 2025. In 2025 the motorcycle segment lost $28.7 million at the operating line (it earned $277.8 million in 2024) and LiveWire lost $75.0 million. For 2026 the company guided to 130,000 to 135,000 motorcycles, a motorcycle result between a $40 million loss and a $10 million profit, a LiveWire loss of $70 to $80 million and capital spending of $175 to $200 million, citing reduced production, weaker manufacturing leverage and a full year of tariffs. First-half 2026 motorcycle revenue was $2.17 billion, up 1.9% on the first half of 2025, and company-wide operating income was $99.5 million versus $272.9 million a year earlier, but the company expects third-quarter shipments to be lower than a year ago and nothing in the filings shows the full-year profit outlook improving. On our basis (operating cash flow of the non-finance entities, less working-capital swings, stock compensation and maintenance capital spending, and excluding dividends received from the finance arm) owner earnings per share were $2.56 in 2021, $3.04 in 2022, $2.36 in 2023, $1.17 in 2024 and negative $0.49 in 2025. The 2022 and 2024-2025 figures are shaped by large inventory swings, which we strip out. Measured before lenders and before interest earned on the parent's cash, this side generated about $127 million in 2024 and used about $71 million in 2025. We anchor on 2025, not the five-year median, because the earlier years had $4.1 to $4.9 billion of revenue before the full-year tariff cost and the lower volumes the company now expects. Year one of the base case therefore starts at the 2025 level, not at a rebound, because the 2026 outlook points to the same level. The finance arm. In late 2025 HDFS sold most of its retail loans (retail receivables fell from $6.37 billion to $0.74 billion), sold 95% of its securitization interests, and agreed to sell up to two-thirds of its retail loan originations to two buyers over five years while continuing to service them for a fee. Each buyer paid $23.3 million for 4.9% of HDFS, about 1.75 times its post-transaction book value, which implies roughly $475 million for the whole; each can exchange its stake for Harley-Davidson shares after seven years. HDFS operating income of $490 million in 2025 included one-time benefits of that deal; the company guides to $45 to $60 million for 2026. We treat HDFS as a lender: its earnings after interest are valued directly, its own funding (about $2.7 billion of notes and commercial paper and $0.5 billion of deposits at the end of 2025) is not subtracted, and the 9.8% held by the outside buyers is deducted. The parent's balance sheet. At December 31, 2025 the non-finance entities held $1.31 billion of cash against one debt, $300 million of 4.625% notes due July 2045; they had received $1.0 billion of dividends from the finance arm during 2025. In the first half of 2026 the company spent about $142 million on share repurchases and dividends. We could not find cash by entity after year-end, so we count $750 million as spare (about $1.17 billion less roughly $400 million to run the business, rounded down for first-half cash needs we could not measure). We carry the notes at $254 million rather than $300 million because their coupon is fixed at 4.625% to 2045, below the 6% rate we use to value cash flows. Net, the parent's spare cash less debt is $496 million, or $4.57 per share on 108.6 million diluted shares. Base case, $8.64 per share. The motorcycle and LiveWire side uses about $71 million a year for three years (worth negative $190 million) and nothing further is credited, because we can name no evidenced source of profit or loss beyond that. Finance arm earnings rise from about $39 million to $54 million by 2030 as the signed five-year agreement keeps at least one-third of originations on its books (net finance receivables grew $134 million in the first half of 2026, about $270 million a year), then stay flat to 2036 and decline 3% a year; our 90.2% is worth $632 million. Adding the $496 million of net cash gives $938 million, or $8.64 per share. We tested the finance arm path against the first-half receivable growth and kept it well below management's stated aim of roughly tripling HDFS operating income by about 2029. Not credited: the at least $150 million of annual cost savings management expects from 2027 (a target; the company did deliver $360 million of savings since 2022 against a $400 million goal), the strategic plan the company said it would announce in the second quarter of 2026, the Harley-Davidson brand's licensing value, and a pension plan funded about $490 million above its obligations. Bear case, $2.25 per share. A second contraction like 2022 to 2025, when revenue fell 27%: a further 25% fall removes about $215 million of gross profit at the 2025 gross margin of 23.9%, partly offset by cost savings of the size delivered in 2023 to 2025 ($103 to $123 million a year), so the motorcycle and LiveWire side uses $130, $170, $150, $100 and $50 million over five years (worth negative $517 million). A consumer credit downturn like 2008 to 2010 doubles loan-loss provisions for two years (the first-half 2026 provision was $31 million), taking finance arm earnings to $25 million, then losses of $25 and $15 million before recovering to about $30 million; our share is worth $265 million, below the roughly $429 million that the outside deal implies for 90.2%. With $496 million of net cash the total is $245 million. The cumulative $600 million burn is within the $750 million of spare cash and the notes are not due until 2045. Bull case, $22.21 per share. The at least $150 million of annual cost savings arrive, half in 2027 and in full from 2028, turning the negative $71 million into positive $4 million and then positive $79 million a year, held flat for ten years and then declining 5% a year (worth $892 million). Finance arm earnings build to $90 million by 2030 as retained originations accumulate (worth $1,024 million). With $496 million of net cash the total is $2,412 million. What would make this wrong: motorcycle profit returning faster than the 2026 outlook implies, a larger or smaller retained loan book than we assume, or parent cash well different from the December 2025 figure, which we could not update by entity. How we arrived at a margin-of-safety price of $5.00. We are least sure of the motorcycle side's earnings: the segment swung from a $278 million profit to a $29 million loss in a year and the 2026 outlook spans a $40 million loss to a $10 million profit. We are more sure of the parent's balance sheet, which is reported by entity, and moderately sure of the finance arm, whose new structure is less than a year old. The worst plausible outcome is the bear case; the structure survives it because the parent's only debt is $300 million of notes due 2045, its spare cash exceeds that case's five-year burn, and the finance arm is funded separately. Outcomes no case models include a freeze in the markets the finance arm borrows from, losses lasting beyond five years, higher tariffs, and the outside buyers exchanging their 9.8% of the finance arm for Harley-Davidson shares from about 2032. If we are wrong on three things, namely the finance arm stays at $39 million with no growth (negative $1.49 per share), the motorcycle-side burn lasts six years instead of three (negative $1.47) and the parent's cash is $200 million lower than we assumed (negative $1.84), the base value falls from $8.64 to about $3.84. The price assumes a holding period of about three years, during which the company pays a dividend of $0.75 a year. The margin-of-safety price is $5.00 because that is about what the parent's spare cash net of its notes is worth ($4.57 a share), leaving little more than $0.40 for a finance arm that outside buyers priced at about $3.95 a share for our 90.2%, with the motorcycle side's cash burn already absorbed; the bear case is worth $2.25 and the base case $8.64.