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Harley-Davidson, Inc. (HOG)
After 28 years riding
motorcycles I think I know a thing or two about the
In fact, some of my best childhood memories
revolved around motorcycles and Harley was the brand that was ingrained
Harley created a lifestyle
and in my mind, they were the
original social network. Harley owners
and other bikers shared a common thread that transcended culture,
status, gender and ethnicity. Over the
past two decades, Harley has expanded its appeal beyond the middle
circles that made it famous. Yuppies and
younger, hipper, trendier buyers have stepped up and put a Harley in
their garage. If you look at the prices of their
bikes and accessories, it’s a wonder that the middle class could ever
one. Many of their showrooms rival some
of the most expensive automotive brands in the world in their layout,
But even with a favorable cultural
shift, the past couple years have been a bit rough for the
Just recently they made cuts to their hourly
workforce and shutdown one of their plants in Wauwatosa WI.
Earlier this month, after 50 years as head of
styling, Willie G. Davidson, who is also the grandson of founder of
Davidson, stepped down.
For a diehard Harley fan and
owner like me, one has to wonder what the effect will be on the Harley
with Willie G. gone. I think that they
will not only continue to produce quality and consistency in their
but perhaps now will begin to explore some unique designs that are
still true Harleys
Fads come and go, but Harley
remains tried and true to its roots in many ways. You may
have a chopper, bobber or custom
bike, but for most of us who ride, especially long distances; there is
like a Harley. I believe their international story is one to watch as
fact that the “chopper” fads are fading, steering more customers to
new, aggressive designs.
Description & Earnings
Harley-Davidson manufactures and sells motorcycles, parts, clothing and
around the world. While that majority of
their customers reside in the U.S, international retail sales have been
as a percent of total sales. Harley estimates that by 2014 over 40% of
sales will occur outside the U.S.
The company sold more units
in 2011 than in 2010, but is still 33% off of their production highs in
motorcycle manufacturer saw third-quarter (2011) net income rise 95.9%
$183.6 million, or 78 cents per share, compared with $93.7 million, or
per share for the same period last year.
HOG is a mid-cap (11.48 billion) company that is trading at about 18
(expectations for next quarter) earnings; HOG became a Zacks Rank 1
on March 27th
earnings increased from $0.62
in FY2010 to $2.55 in FY2011 (diluted) and they are expected to earn
FY2012 according to the Zacks Consensus Estimate.
Harley has surprised analysts to the
upside 3 quarters in a row with a miss back in March of 20111 at an
average of almost
the 15 analysts who cover HOG,
the consensus is for the company to grow earnings by 18% in the current
(FY2012) and roughly 21% in FY2013.
In terms of the magnitude of
analyst estimate trends, we are seeing consensus estimates higher than
were 90 days ago for the current quarter and for FY2013; next quarter
year estimates are lower than they were 90 days ago. These
results include several analysts (4) moving
their estimates higher in the past 30 days.
Next quarter's average analyst
EPS estimate is for 71 cents, according to the Zacks Consensus. HOG
results on April 17th.
Market Performance &
Harley, surprisingly has been in a bullish trend since November making
highs and higher lows. The stock crossed
above its major moving averages in early January and has since rallied
hitting a new 52 week high of almost $51.
for initial support to come at
the $47.25 level. Below that the 50 and
200 day moving averages of $46.43 and $40.35 will be key support levels.
has exceeded the S&P 500’s
performance in the past year by 12.5% and outpaced it by over 14.45% in
past 3 months alone! The stock remains
in a bullish trend and has maintained its momentum in the past month,
the index by about 3.5%.
tends to be more
volatile, but correlated to the markets being that Harley has a Beta
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
Whisper Trader Service.