Standard & Poor’s may be busy downgrading the credit ratings of sovereign nations and all of the agencies and dependent entities tied to them, but some companies are finding credit rating upgrades. This is the case for Harley-Davidson, Inc. (NYSE: HOG) today.
S&P raised the rating of the U.S.-based motorcycle manufacturing legend after its 10.7% growth in global motorcycle shipments in 2011. It was also on a 5.9% gain in the company’s retail sales alongside “solid performance from Harley-Davidson Financial Services.”
S&P believes that demand in the retail channel will support modest shipment growth in 2012 .
As such, S&P raised the prior “BBB” investment-grade to a more stable investment-grade of “BBB+” and it has been removed from CreditWatch with a “Stable” outlook based upon a modest growth of shipments in 2012, as well as ongoing manufacturing improvements followed by sustained underwriting standards out of its finance unit.
Harley-Davidson shares are up 1.4% at $43.92 against a 52-week range of $31.50 to $46.88.
As for the equity valuation, which is much different from the credit ratings… Thomson Reuters has a consensus target price of about $45.00 versus the $43.92 stock price today. Either analysts have to raise their targets or downgrades may come soon based upon valuations. Thomson Reuters has estimates of $2.78 EPS for fiscal Dec-2012 and that comes to almost 16-times expected earnings.
JON C. OGG
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