Wednesday, November 26, 2008

Harley Davidson in a Different Light

HOG closed on Wednesday 11/26/2008 at $17.06. Based on that close the Market Capitalization is 3.97 Billion. If I could convince everyone that owned the shares to sell me theirs at that close I could buy HOG for 4 billion dollars.

A lot of money for sure but let's look at a few other numbers before we make our decision. The company had sales revenue in millions of 6,143.04, 6,185.58, 5,673.83 and 5,320.45 in 2007, 2006, 2005, 2004. So 6 billion, 6 billion, 5 billion and 5 billion during its most recent fiscal years. Sure their sales could drop and probably will in most recessions but they will also go back up. How many 40 year olds, 50 year olds, even 30 year olds do you see on crotch rockets? If I bought a bike I'd buy a Harley and so would you right.

The whole company is selling for less than their yearly revenue the past 4 years! It gets better.

HOG made the following in millions (NET Income) in 2007, 2006, 2005, 2004: 933.84, 1,043.15, 959.60, 889.77. So they made about 1 billion, 1 billion, 1 billion and 0.9 billion during the past 4 years.

So for our 4 billion purchase of Harley we get 5.5 billion in sales and 1 billion of income using the past 4 years numbers. Again, in a recession these numbers are going go down. But by how much? Are older men and women that can afford and want a motorcycle going to disapeer? Are they going to swith to crotch rockets? Harley is an American Icon!

If you got an extra 4 billion laying around I say lets do it. If not buying small pieces of the company at these low prices looks like a bargain to me. What do you think?

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