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No. of Recommendations: 8
Harley-Davidson has been one of my better performing stocks recently so I thought I would run it through a valuation spreadsheet I'm putting together. The results look pretty good. Keep in mind that I haven't double checked the numbers by hand, so things may be a little off if my formulas are faulty.

Harley-Davidson IETC Five-Minute Test

Criteria Pass/Fail
1. Auditor's Opinion Pass
2. Lawsuits Pass
3. Unusual Losses Pass
4. Restatements Pass
5. Intangible Assets Ratio Pass
6. Debt to Equity Ratio Pass
7. Revenue Growth Pass
8. Stock Based Comp. Ratio Pass
9. Short Ratio Pass

Profit Summary

1996 1997 1998 1999 2000 2001 2002 2003
Accrual 0.54 0.57 0.69 0.86 1.13 1.43 1.90 2.50
Defensive 0.05 -0.02 0.15 0.47 0.66 0.73 0.99 2.27
Enterprising 0.46 0.61 0.45 0.64 0.80 0.94 1.28 1.96

Quality of Profits and Earnings Power Chart™

View the Quality of Profits and Earnings Power Chart™ images (thanks to H. Heiserman for the Excel macros) at:

Croesus Test

(a) Price: 57.16
(b) Shares Outstanding: 302,271
(c) Cash: 1,322,660
(d) Debt: 994,305
(e) Current Earnings: 760,928

(f) Number of Years: 5
(g) Desired Return Rate: 15%
(h) Dividend Yield: 0.7%
(i) Estimated Ending P/E: 17

(j) Current Market Value: a*b-c+d = 16,949,455
(k) Capital Appreciation: g-h = 14.3%
(m) Future Market Value: j*(1+k)^f = 33,066,399
(n) Future Earnings: m/i = 1,945,082

Estimated earnings CAGR: (n/e)^(1/f)-1 = 20.65%

Sanity Check

HDI has grown earnings at 29% per year over the past 5 years and analyst estimates are for 15% revenue growth per year over the next 5 years. If HDI can continue past growth then it would be an attractive buy. If lower growth is ahead, which might be the case if sales growth slows (around 19% per year the last 5 years vs. estimates of 15% the next 5 years) then it might be wise to wait for a lower price before puchasing.
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