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Holley (HLLY)
NYSE:HLLY
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Holley
(NYSE:HLLY)
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Rating:55Neutral
Price Target:
$3.00
▲(10.29% Upside)
Action:ReiteratedDate:03/05/26
The score is driven primarily by mid-range financial quality: solid margins and improving free cash flow, tempered by leverage and inconsistent net profitability. Earnings-call guidance and the deleveraging plan are constructive, but the technical setup is weak with the stock trading below key moving averages, and valuation lacks clear upside support at a ~25.7 P/E with no dividend.
Positive Factors
Margin expansion & targets
Holley has materially expanded gross and adjusted EBITDA margins and is explicitly targeting ~40% gross and ≥20% adjusted EBITDA. Sustained higher margins reflect pricing, cost savings and product mix improvements, supporting durable operating cash generation and resilience through cycles.
Consistent free cash flow
Three consecutive years of positive free cash flow and meaningful FCF in 2025 improve financial flexibility. Persistent cash generation funds capex, deleveraging and strategic investment without reliance on external financing, enhancing long-term solvency and capital allocation optionality.
Credible deleveraging progress
Meaningful debt paydowns and a clear target to exit 2026 below 3.5x show management prioritizes balance sheet repair. Lower leverage reduces interest and covenant risk, expands strategic headroom for investments, and makes earnings more resilient to cyclical demand shocks over the medium term.
Negative Factors
Elevated leverage
Despite recent paydowns, leverage remains elevated and historical peaks weakened equity returns. Debt-to-equity near 1.3 and negative ROE indicate the capital base has struggled to generate consistent shareholder returns, leaving sensitivity to revenue swings and limiting strategic flexibility.
Inconsistent net profitability
Operating margins improved, but net-income volatility—including multi-year losses—signals earnings instability. Irregular bottom-line performance makes forecasting free cash flow and returns harder, complicates sustained reinvestment, and raises the risk of margin reversals during demand softness.
Tariff and demand headwinds
Structural external pressures—tariffs that forced sizable prior price actions and a bifurcated consumer recovery—constrain pricing power and volume consistency. With limited scope for more price increases, Holley will need sustained cost actions or product mix gains to protect margins long term.
Holley (HLLY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$325.99M
Dividend YieldN/A
Average Volume (3M)760.61K
Price to Earnings (P/E)25.7
Beta (1Y)1.41
Revenue Growth-3.20%
EPS Growth-257.73%
CountryUS
Employees1,467
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)0.04
Shares Outstanding119,847,830
10 Day Avg. Volume461,828
30 Day Avg. Volume760,606
Financial Highlights & Ratios
PEG Ratio-0.14
Price to Book (P/B)1.10
Price to Sales (P/S)0.80
P/FCF Ratio34.35
Enterprise Value/Market Cap2.51
Enterprise Value/Revenue1.33
Enterprise Value/Gross Profit3.24
Enterprise Value/Ebitda7.75
Forecast
1Y Price Target
$5.83Price Target Upside114.34% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)0.38
Revenue Forecast (FY)$629.95M
Holley Business Overview & Revenue Model
Company DescriptionHolley Inc. designs, manufactures, and markets automotive aftermarket products for car and truck enthusiasts in the United States, Canada, Europe, and China. The company's products include carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners, automotive performance plumbing products, and exhaust products as well as shifters, converters, transmission kits, transmissions, tuners, and automotive software. It also offers wheels, chassis and suspension products, helmets, head and neck restraints, seat belts, firesuits, and electronic control and monitoring systems. The company sells its products under the Holley, Holley EFI, APR, MSD, Flowmaster, Powerteq, Accel, and Simpson brands to retailers directly, as well as through distributors and online channel. The company was founded in 1903 and is headquartered in Bowling Green, Kentucky.
How the Company Makes MoneyHolley primarily makes money by selling automotive aftermarket performance and restoration products across multiple brands. Revenue is generated from product sales to (1) traditional wholesale/distribution channels (aftermarket parts distributors and retailers), (2) direct-to-consumer e-commerce and company-owned channels, and (3) automotive original equipment manufacturers (OEMs) and other business-to-business customers where Holley supplies performance-related components or systems. Its key revenue streams are tied to unit volumes and product mix within categories such as fuel delivery and engine management (e.g., electronic fuel injection and related controllers), intake/exhaust, and other under-hood performance accessories. Earnings are influenced by demand in the enthusiast vehicle market, new product introductions, brand strength and pricing, channel relationships with distributors/retailers and e-commerce platforms, and the company’s ability to manage manufacturing/sourcing costs and inventory. Specific material partnerships or customer concentration details are null.
Holley Earnings Call Summary
Earnings Call Date:Mar 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call emphasized clear and measurable progress across revenue, margins, cash flow and leverage: sustained core growth (four consecutive quarters), margin expansion (gross and adjusted EBITDA), meaningful free cash flow, and significant deleveraging. Management also outlined a concrete 2026 plan with mid-single-digit revenue growth guidance, incremental cost synergies and continued investment (ERP/WMS, product development). Headwinds include higher SG&A from strategic investments, incomplete inventory reduction, tariff-related pricing pressures, uneven consumer demand (K-shaped recovery), and near-term weather-related disruption. On balance the positive operating and financial momentum and the credible deleveraging trajectory outweigh the near-term challenges.Q4-2025 Updates
Positive Updates
Return to Reported Net Sales Growth
Fiscal 2025 net sales of $613.5 million, representing 1.9% reported year-over-year growth and core net sales growth of 6.6% (driven by 3.8% volume and 2.8% pricing). This is the company's first full-year top-line growth since 2021.
Strong Fourth-Quarter Commercial Momentum
Q4 net sales of $155.4 million, up 10.9% year-over-year, with core net sales up 13.5% (Q4 volume and price contribution described as ~7.8% and ~5.7% in core basis). Management highlighted four consecutive quarters of core growth, with Q4 being the strongest quarter of 2025.
Margin Expansion and Profitability
Gross margin expanded to 46.8% in Q4 (+120 basis points year-over-year) and to 43.4% for FY2025 (+378 basis points). Adjusted EBITDA was $124.0 million for the year (up $13.5 million vs. 2024) with adjusted EBITDA margin of 20.2% for FY2025 (+191 basis points year-over-year). Q4 adjusted EBITDA was $33.2 million with a 21.4% margin (+56 bps year-over-year).
Consistent Free Cash Flow Generation
Generated $34.2 million of free cash flow in fiscal 2025 (and $3.9 million in Q4), marking a third consecutive year of positive free cash flow and supporting balance sheet improvements.
Deleveraging and Balance Sheet Strengthening
Completed $25 million of debt prepayments in 2025 and over $100 million of prepayments since September 2023. Covenant net leverage reduced to 3.75x at year end (down from 5.67x peak in 2023) and management achieved its sub-4.0x year-end target.
Operational and Cost Savings Realized
Delivered approximately $20 million of purchasing, tariff mitigation and operational savings in 2025 (management also cited $10 million of operational savings achieved during the year), and expects incremental $5–7 million in 2026 and >$15 million total cost synergies in 2026.
Product Innovation and Revenue Program Contributions
New product launches contributed about $23 million in annual new product sales; strategic initiative tracker showed meaningful contributions in 2025 (e.g., Product Innovation $40.3M full year, Trailblazing Trusted Partner $43.9M full year, Premier Consumer Journey $12.5M full year).
Broad-Based Divisional Strength and Inventory Availability
Every division contributed to Q4 growth (American Performance +10%, Truck & Off-Road +5.4%, Safety & Racing +13.3) and the company maintained an average in-stock rate of ~91% across the top 2,500 SKUs, supporting omni-channel performance.
2026 Guidance and Strategic Targets
Guidance for fiscal 2026: revenue $625–655 million (implying ~4% growth at midpoint), adjusted EBITDA $127–137 million (~6.5% growth at midpoint), capex $15–20 million, and a target to exit the year below 3.5x leverage; management reiterated long-term targets (mid single-digit organic growth, ≥20% adjusted EBITDA).
Negative Updates
Adjusted Net Income Pressure
FY2025 adjusted net income was $21.2 million versus $24.8 million in FY2024 (down ~14.5%); Q4 adjusted net income was $4.6 million versus $12.6 million prior year (down ~63.5%), reflecting higher operating investments and timing differences despite improved net income on a GAAP basis due to prior-year impairments.
Higher SG&A and Strategic Investments
SG&A (including R&D) increased to $165.0 million for FY2025 from $150.9 million in FY2024 (+9.3%). Q4 SG&A was $47.9 million versus $39.4 million prior year (+21.6%), driven by investments in SOX readiness, cybersecurity, tariff mitigation, and increased sales support.
Inventory Reduction Shortfall and Elevated Levels
Inventory did not fully meet original reduction targets for 2025; although working capital (excluding tariff impacts) improved by $9 million for the year (including $4.5M in Q4), management noted inventory remained temporarily elevated as part of deliberate supply-chain positioning.
Tariff and Pricing Headwinds; Pricing Cadence Risks
Tariff impacts required earlier pricing actions (noted ~8.75% increase taken in Q2 with flow-through occurring through Q4). Management expects limited additional pricing in 2026 given market sensitivity, creating pressure to offset tariffs through cost actions rather than price alone.
Demand Variability and Macroeconomic Risk
Company highlighted an uneven 'K-shaped' consumer backdrop where lower- and middle-income households are pressured by inflation/tighter credit while higher-income customers remain resilient; this introduces demand risk and potential variability across categories.
Near-Term Seasonal/Weather Disruption
Early-2026 retail activity was negatively affected by significant winter weather events (late January/early February), shifting sales cadence and creating some short-term softness and heavier channel inventory in affected periods.
Transition-Related Headwinds in Safety & Racing
Safety & Racing faced earlier headwinds tied to the October transition to Snell 2025 helmet certification; while the division accelerated after the new-product launch, the certification timing weighed on earlier performance in 2025.
Company Guidance
Holley guided fiscal 2026 revenue of $625M–$655M (implying roughly +4% to +4.5% growth, midpoint ≈+4.3%) and adjusted EBITDA of $127M–$137M (≈+6.5% at the midpoint), with capital expenditures of $15M–$20M; management said the plan is to deliver over 4% revenue growth and more than $15M of cost synergies in 2026, including $5M–$7M of incremental operational savings and $10M–$15M of targeted inventory reduction, begin ERP/WMS implementation (go‑live planned later), exit the year below 3.5× covenant net leverage (progressing toward ~3.0× in 2027), and sustain long‑term targets of ~40% gross margin and at least 20% adjusted EBITDA margin while maintaining conservative liquidity.Holley Financial Statement Overview
Summary
Operating performance is stabilizing with modest TTM revenue growth (+2.6%) and healthy gross/EBITDA margins, and cash generation is a relative strength with positive and improving free cash flow. However, bottom-line results have been inconsistent and leverage remains a key constraint (debt-to-equity ~1.3; negative ROE in 2024/TTM), keeping the score mid-range.Income Statement
TTM (Trailing-Twelve-Months) revenue growth is modest (+2.6%) after a down 2024, suggesting stabilization but not a strong growth profile. Profitability is mixed: gross margin has improved versus prior years, and EBITDA margin remains healthy, but net results have been inconsistent (losses in 2021 and 2024; thin positive net income in TTM). Overall, operating profitability looks resilient, but bottom-line volatility keeps the score in the middle range.58
Neutral
Balance Sheet
Leverage remains a key constraint with debt-to-equity around ~1.3 in recent periods (and materially higher earlier), limiting financial flexibility. Equity has improved versus 2020–2021, but returns on equity are negative in 2024 and TTM (Trailing-Twelve-Months), indicating the capital base is not currently generating consistent shareholder returns. The balance sheet is serviceable, but leverage plus uneven profitability raises risk.45
Neutral
Cash Flow
Cash generation is a relative strength: operating cash flow and free cash flow are positive in 2023–2024 and TTM (Trailing-Twelve-Months), with strong TTM free cash flow growth. However, cash flow has been volatile historically (very weak 2022), and recent cash conversion is not consistently strong versus earnings as free cash flow is modest relative to net income in TTM. Net-net, cash flow quality is decent but not yet consistently durable.63
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 613.51M | 602.22M | 659.70M | 688.41M | 692.85M |
| Gross Profit | 252.46M | 246.74M | 256.09M | 253.66M | 286.81M |
| EBITDA | 110.98M | 106.70M | 121.54M | 148.95M | 152.47M |
| Net Income | 19.18M | -23.23M | 19.18M | 73.77M | -27.14M |
Balance Sheet | |||||
| Total Assets | 1.16B | 1.13B | 1.20B | 1.25B | 1.19B |
| Cash, Cash Equivalents and Short-Term Investments | 37.23M | 56.09M | 41.08M | 26.15M | 36.33M |
| Total Debt | 522.65M | 557.91M | 589.12M | 680.67M | 645.55M |
| Total Liabilities | 715.03M | 712.17M | 762.19M | 833.65M | 888.57M |
| Stockholders Equity | 448.93M | 421.15M | 441.15M | 415.99M | 304.49M |
Cash Flow | |||||
| Free Cash Flow | 14.33M | 40.09M | 82.16M | -1.28M | 6.35M |
| Operating Cash Flow | 48.94M | 46.90M | 88.09M | 12.31M | 21.58M |
| Investing Cash Flow | -34.61M | 2.02M | -4.45M | -25.04M | -134.09M |
| Financing Cash Flow | -32.95M | -34.60M | -69.01M | 2.85M | 77.16M |
Holley Technical Analysis
Negative
2.72
Price Trends
3.91
Negative
3.87
Negative
3.34
Negative
Market Momentum
-0.29
Positive
27.28
Positive
20.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLLY, the sentiment is Negative. The current price of 2.72 is below the 20-day moving average (MA) of 3.59, below the 50-day MA of 3.91, and below the 200-day MA of 3.34, indicating a bearish trend. The MACD of -0.29 indicates Positive momentum. The RSI at 27.28 is Positive, neither overbought nor oversold. The STOCH value of 20.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HLLY.
Holley Risk Analysis
Holley disclosed 58 risk factors in its most recent earnings report. Holley reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Holley Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $305.71M | 15.92 | 12.07% | ― | 6.83% | 46.38% | |
72 Outperform | $490.69M | 18.59 | 7.39% | 2.11% | -36.91% | -56.72% | |
63 Neutral | $3.22B | 11.23 | -39.65% | 1.49% | -1.09% | 56.16% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | $325.99M | 25.68 | -5.54% | ― | -3.20% | -257.73% | |
53 Neutral | $768.46M | 10.25 | 11.76% | 3.32% | 23.96% | 11.01% | |
51 Neutral | $196.14M | 33.64 | 0.75% | ― | 6.72% | ― |
* Consumer Cyclical Sector Average
HLLY
Holley
2.72
0.15
5.84%
MLR
Miller Industries
43.15
-0.30
-0.69%
MPAA
Motorcar Parts Of America
10.21
-0.37
-3.50%
SMP
Standard Motor Products
34.70
9.39
37.07%
STRT
Strattec Security
73.14
30.16
70.17%
GTX
Garrett Motion
16.96
8.36
97.12%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.