Arctic Cat (NASDAQ: ACAT) and Harley-Davidson (NYSE:HOG) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitabiliy and analyst recommendations.

Earnings & Valuation

This table compares Arctic Cat and Harley-Davidson’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arctic Cat N/A N/A N/A ($3.27) -5.66
Harley-Davidson $5.75 billion 1.57 $1.18 billion $3.51 14.70

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.

Profitability

This table compares Arctic Cat and Harley-Davidson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arctic Cat -31.71% -115.63% -39.31%
Harley-Davidson 12.50% 31.69% 6.17%

Volatility and Risk

Arctic Cat has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500. Comparatively, Harley-Davidson has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Dividends

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. Harley-Davidson has raised its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for Arctic Cat and Harley-Davidson, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arctic Cat 2 4 1 0 1.86
Harley-Davidson 0 17 4 0 2.19

Arctic Cat currently has a consensus price target of $17.42, suggesting a potential downside of 5.86%. Harley-Davidson has a consensus price target of $54.93, suggesting a potential upside of 6.44%. Given Harley-Davidson’s stronger consensus rating and higher probable upside, analysts plainly believe Harley-Davidson is more favorable than Arctic Cat.

Insider and Institutional Ownership

99.5% of Arctic Cat shares are held by institutional investors. Comparatively, 85.0% of Harley-Davidson shares are held by institutional investors. 2.7% of Arctic Cat shares are held by insiders. Comparatively, 0.7% of Harley-Davidson shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Harley-Davidson beats Arctic Cat on 10 of the 14 factors compared between the two stocks.

About Arctic Cat

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.

About Harley-Davidson

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.

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