Harley-Davidson, Inc. ( HOG - Analyst Report ) , an American icon and a company loved by every two-wheeler aficionado across the planet, has delivered a string of positive earnings surprises leveraging its extraordinary and historical brand value.

The Wisconsin-based motorcycle behemoth, which has a cult-like following, has produced an average earnings surprise of 8.61% over the trailing four quarters and has seen its stock price rise roughly 24% year-to-date. Given its estimated long-term earnings growth projection of nearly 12%, this Zacks #1 Rank (Strong Buy) stock is a good bet for aggressive growth investors.

The Hot Wheels of Harley

Harley-Davidson commands a lion’s share of the U.S. motorcycle market, banking on a strong brand that combines an intriguing blend of power, motif and style. Besides a strong earnings momentum, other areas of strength include consistent revenue growth, expanding margins and a healthy price performance.

The company saw a 44% surge in its profit in the first quarter of 2012, reported on April 25, sending its shares up roughly 6% to close at $53.49. Earnings of 74 cents per share topped the Zacks Consensus Estimate by 3 cents.

Consolidated revenues (including financial services) cruised 17% year-over-year to $1.43 billion, riding on higher motorcycles and related products sales. Operating income zoomed 43% year-over-year to $275.5 million in the quarter. The results were boosted by a strong trend in retail sales of new motorcycles, reflecting a mending U.S. economy and the company’s transformation strategy.

Harley-Davidson beefed up its shipment guidance for 2012 and now expects to ship 245,000 to 250,000 motorcycles globally this year, compared with its prior guidance of 240,000 to 245,000. The optimism, in part, reflects strong U.S. demand.

Estimates Moving Up

The Zacks Consensus Estimate for 2012 has moved up 3% over the last 60 days to $2.83 a share, representing an estimated annualized growth of roughly 21%. For 2013, the Zacks Consensus Estimate rose by roughly 6% to $3.60 per share over the same period, reflecting an estimated growth of around 27%.

Stretched Valuation

Harley-Davidson trades at a premium to its peers by most metrics. It has a PEG ratio of 1.47, a 47% premium to the benchmark of 1 for a fairly priced stock. This implies that the forecasted long-term growth (of 12%) is currently priced at a premium. Moreover, the stock is currently trading at a forward P/E of 17.08x, a roughly 88% premium to the peer group average of 9.09x. The price-to-book of 4.32x is also higher than the peer group average of 2.38x.

However, given the strong earnings projections, the premium valuation should not disappoint investors.

Chart Shows Strength

Harley-Davidson’s price performance has been reasonably strong with the chart showing an upward trend with a few minor pullbacks. The earnings estimates have consistently guided the stock to rally higher, something which aggressive growth investors should find attractive. A series of earnings beats, rising estimates and upbeat growth prospects makes Harley-Davidson worth considering.

Founded in 1903, Harley-Davidson, Inc. is a leading designer and manufacturer of heavyweight motorcycles and related products and merchandise. The company, which has a market cap of roughly $11 billion, commands around 50% share of the U.S. market, providing scale advantages over most competitors. The company maintains an extremely strong franchise and has a network of over 706 independent U.S. dealers (over 1,468 worldwide).

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