Ivey Publishing
Harley-Davidson Inc.: Dividend Discount Valuation
Product Number:
9B20N012
Publication Date:
04/15/2020
Revised Date:
04/15/2020
Length:
8 pages (3 pages of text)
Product Type:
Case (Pub Mat)
Source:
Ivey
In late July 2018, a buy-side analyst at Dimensional Wealth Group (DWG), a privately owned investment management firm, needed to decide whether DWG should increase, decrease, or not change its position in Harley-Davidson Inc. (Harley-Davidson) stock. DWG had been bullish on its Harley-Davidson stock, leading DWG to increase its position in Harley-Davidson substantially over time. However, Harley-Davidson was currently facing several challenges, which suggested that the timing was appropriate for DWG to reconsider its bullish position. How should the analyst determine a suitable recommendation regarding the Harley-Davidson stock?
Learning Objective:
This case can be used in undergraduate- and graduate-level finance courses to introduce the single-stage dividend discount model (DDM) as a relatively simple and intuitive valuation tool. The case can also be used in more advanced finance courses by placing more emphasis on the multi-stage component of the DDM valuation. After working through the case and assignment questions, students will be able to do the following:
  • Assess the opportunities and risks associated with investment in a company’s stock, considering strengths, weaknesses, opportunities, and threats.
  • Reinforce financial statement analysis as an important tool for sizing up a company.
  • Understand the key advantages and disadvantages, assumptions, and mechanics associated with using single- and two-stage DDMs to value a company’s stock.
Issues:
Disciplines:
Finance,  International
Industries:
Manufacturing
Setting:
United States, Large, 2018
Intended Audience:
Undergraduate/MBA
Price:
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download
Associated Materials
Supplements: 7B20N012 (125 KB)
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