On Mar 6, 2014, we issued an updated research report on Harley-Davidson, Inc. (HOG - Analyst Report). The company witnessed positive earnings surprises in the trailing 4 quarters with an average beat of 2.48%.
Harley-Davidson posted a 9.7% year-over-year rise in earnings to 34 cents per share in the fourth quarter of 2013 from 31 cents in the year-ago quarter. Earnings topped the Zacks Consensus Estimate of 32 cents.
The year-over-year increase was due to higher revenues and lower operating expenses in the Motorcycles segment. Consolidated revenues improved 1.7% to $1.19 billion, exceeding the Zacks Consensus Estimate of $1.03 billion.
Harley-Davidson enjoys a significant market share in the U.S. motorcycle market. The company’s sales are rising and efficient capital deployment is boosting shareholder value. Although restructuring initiatives are increasing savings, we are concerned about the aging customer base, expensive products and strong competition.
Although Harley-Davidson enjoys a dominant market position in the U.S., its competitors have greater financial resources. This is largely because those companies have more diverse product lines and are greater in size than Harley-Davidson, which only operates in a niche market. Moreover, Harley-Davidson’s strategy to focus on faster and smaller bike segments by acquiring Buell and MV Agusta failed.
For 2014, Harley-Davidson announced its shipment guidance of 279,000–284,000 motorcycles to dealers and distributors worldwide, up 7–9% over 2013. The Zacks Consensus Estimate for Harley-Davidson’s 2014 earnings is $3.90 per share, up 18.9% over 2013.
Harley-Davidson currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks worth considering are Tata Motors Limited (TTM - Snapshot Report), Daimler AG (DDAIF) and Tesla Motors, Inc. (TSLA - Analyst Report). Tata Motors and Daimler sport a Zacks Rank #1 (Strong Buy), while Tesla carries a Zacks Rank #2 (Buy).