Harley-Davidson Inc (NYSE:HOG) has not performed all that well over the past few years — as a company or as a stock. HOG stock has gained just 2.6% over the past five years, while broad markets have gained sharply. And 2017 revenue is likely to be below 2012 levels. Net income will decline as well, with what looks like decent earnings-per-share growth driven solely by share repurchases.

The question with Harley-Davidson stock is whether that will change going forward. Management was confident coming out of the third-quarter report, which drove HOG higher despite a sharp decline in sales. Several analysts have jumped on board, most recently Wells Fargo & Co (NYSE:WFC), which upgraded the stock on Monday morning. As a result, HOG stock has gained 20% since hitting a 16-month low in early November.

But from here, HOG looks like a stock headed for flat performance, at best. The stock is a beneficiary of tax reform, which means it’s trading at a likely 13-14x multiple to 2018 EPS. But this is a business that isn’t growing precisely when it should be growing fastest.

The macro picture is strong. Baby boomers are retiring. The corporate tax rate has been cut. And the dollar — whose strength caused competitive problems against rivals like Honda Motor Co Ltd (ADR) (NYSE:HMC) and Suzuki Motor Corp (OTCMKTS:SZKMY) — is weakening.

These should be boom times for Harley-Davidson. And yet over five years, both sales and total profits are declining. If Harley can’t win now, what happens in the future?

HOG’s Plan for a Turnaround

It’s not as if Harley-Davidson is unaware that business is weaker than hoped. The company has detailed a turnaround strategy, with a series of 10-year objectives.

H-D is looking to create 2 million new riders in the next decade. The Harley-Davidson Riding Academy is a key part of that effort, teaching potential customers how to ride — and hopefully purchase Harley bikes.

International sales are another potential growth driver. Perhaps somewhat surprisingly, 32% of 2016 revenue came from overseas, a share that actually should tick up in 2017. Retail sales rose 2.3% in 2016, and the 2.9% decline year-to-date is a better performance than the 8% decline in domestic sales. H-D’s goal is to get its revenue to a 50/50 split between U.S. and international, with new dealerships established this year working toward that goal.

In short, there are some levers Harley-Davidson can pull. Meanwhile, a dollar that has weakened over 10% from late 2016 peaks (based on the so-called DXY index) should help competitiveness both overseas and in the U.S. Yen-based competitors like Honda and Suzuki have been able to discount heavily the last few years, as receiving strong dollars offset the lower pricing.

The bull argument for HOG stock, then, is that business should get better going forward. But I simply find that very difficult to believe.

HOG’s Long-Term Problems

From a long-term standpoint, the idea that motorcycle ridership is going to do anything but decline seems close to ludicrous. It’s true that Millennials seem to get blamed for everything — and stereotypically don’t want to do anything their parents did — but there’s a clear generational shift away from motorcycles, and Harleys in particular. Harley-Davidson itself is aware of this — but that doesn’t mean there’s all that much management can do about it.

It’s also true that rival Polaris Industries Inc. (NYSE:PII) has seen its sales, and its stock, rise while Harley-Davidson stock has struggled. But even PII only has gained 48% over the past five years, a performance worse than the market as a whole. Its Indian brand is much smaller — making share gains more important — and it has shown strength in other products like snowmobiles and ATVs.

The motorcycle industry is a declining business, as shown in numbers reported by Harley-Davidson itself. And that casts a huge shadow over HOG stock. If the company was executing poorly, or if it was hemorrhaging market share, there would be more to fix — and more potential gains for a turnaround.

That’s not the case. Harley-Davidson simply has a large share of a market in decline. That’s historically a very dangerous combination.

HOG Stock Is Overpriced – And Maybe a Short

There’s a reason 18% of Harley-Davidson stock is sold short. There’s a very clear bear thesis here. The market is shrinking, which in turns leads to lower sales and lower margins. Add to that the $6 billion-plus in net debt, and net income can see amplified declines.

Even including tax reform in next year’s numbers, and giving credit for $4 in EPS, HOG still trades at 13x+ EPS. That’s not a multiple befitting a declining business. After all, General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) trade at 7-8x forward EPS.

HOG has the same concerns — perhaps without the risk of self-driving motorcycles. It’s a cyclical business that should be near a top. Increased efficiency means products last longer, which hurts demand. Lower sales are magnified through operating and financial leverage.

That’s a case that suggests HOG should be valued at no more than 10x EPS, a number that incorporates at least some of those declines.

And it implies that Harley-Davidson stock is worth less than $40 – 25% downside. That’s where HOG is heading once it becomes clear to the entire market that its business is in decline.

As of this writing, Vince Martin has no positions in any securities mentioned.