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Harley-Davidson (HOG) Down 2.5% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Harley-Davidson, Inc. (HOG - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Harley-Davidson Q2 Earnings Beat Estimates, Fall Y/Y
Harley-Davidson reported earnings of $1.48 per share in the second quarter of 2017, beating the Zacks Consensus Estimate of $1.37. However, earnings were lower than $1.55 recorded in the year-ago quarter.
Net income decreased to $258.9 million from $280.4 million, recorded a year ago.
Motorcycle and related products revenue declined to $1.58 billion in the second quarter of 2017 from $1.67 billion in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.6 billion. The company also lodged consolidated revenues of $1.77 billion, which deteriorated from the prior-year tally of $1.86 billion.
Operating income decreased to $401.6 million from $412.3 million in the year-ago period.
Motorcycles and Related Products
The decline in revenues from Motorcycles and Related Products was due to lower motorcycle shipments. Operating income slipped to $319.6 million from $322.7 million, a year ago.
During the quarter, revenues from Harley-Davidson motorcycles fell 4.5% to $1.27 billion. The company shipped 81,807 motorcycles to dealers and distributors worldwide during the second quarter of 2017, compared with 88,160 shipments in the second quarter of 2016.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dropped 6.7% to 81,388 units from 87,266 motorcycles in the year-ago quarter. This was due to weakness in the U.S. as well as some international markets.
Harley-Davidson’s sales in the U.S. declined 9.3% to 49,668 motorcycles. International sales went down 2.3% to 31,720 motorcycles from 32,480 motorcycles in the prior-year quarter. A minor improvement of 0.4% in sales in Canada was offset by a 9.3% plunge in the U.S., 8.5% decline in Latin America, 1.6% in the Middle East and Africa (EMEA) region, plus 3.2% dip in the Asia-Pacific region.
Revenues from Parts and Accessories fell 8% to $237.5 million, while revenues from General Merchandise — including MotorClothes apparel and accessories — tumbled 16.8% to $63 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment dipped 1.5% to $188.1 million in the second quarter of 2017. Operating income declined 8.5% to $81.9 million from the year-ago figure of $89.6 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $988.5 million as of Jun 25, 2017, compared with $864.7 billion as of Jun 26, 2016. Long-term debt slid to $4.68 billion from $5.31 billion as of Jun 26, 2016.
For the six-months ended on Jun 25 2017, Harley-Davidson’s operating cash inflow improved to $627.1 million from $456.3 million. Capital expenditures diminished to $69.8 million from $107.5 million in the year-ago period.
Share Repurchases
Harley-Davidson spent $163.2 million to repurchase 3 million shares in second-quarter 2017. As of second-quarter end, it had authorization to buy back another 15 million shares.
Looking Forward
Harley-Davidson changed its expectation of motorcycle shipments to declining unit sales for 2017, as against the previous expectation of flat in 2016. The company expects to ship 241,000- 246,000 units in 2017, roughly reflecting a 6-8% decline from 2016.
In the third quarter of 2017, the motor company expects to dispatch around 39,000-44,000 motorcycles, representing a decline of 10-20% from the year-ago period.
The company altered its projection of operating margin for 2017, as against the previous expectation of a similar figure in 2016. It expects the operating margin to weaken 1% from the 2016 levels. Also, it expects capital expenditures of worth $200–$220 million this year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 47.8% due to these changes.
At this time, Harley-Davidson's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
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Harley-Davidson (HOG) Down 2.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Harley-Davidson, Inc. (HOG - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Harley-Davidson Q2 Earnings Beat Estimates, Fall Y/Y
Harley-Davidson reported earnings of $1.48 per share in the second quarter of 2017, beating the Zacks Consensus Estimate of $1.37. However, earnings were lower than $1.55 recorded in the year-ago quarter.
Net income decreased to $258.9 million from $280.4 million, recorded a year ago.
Motorcycle and related products revenue declined to $1.58 billion in the second quarter of 2017 from $1.67 billion in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.6 billion. The company also lodged consolidated revenues of $1.77 billion, which deteriorated from the prior-year tally of $1.86 billion.
Operating income decreased to $401.6 million from $412.3 million in the year-ago period.
Motorcycles and Related Products
The decline in revenues from Motorcycles and Related Products was due to lower motorcycle shipments. Operating income slipped to $319.6 million from $322.7 million, a year ago.
During the quarter, revenues from Harley-Davidson motorcycles fell 4.5% to $1.27 billion. The company shipped 81,807 motorcycles to dealers and distributors worldwide during the second quarter of 2017, compared with 88,160 shipments in the second quarter of 2016.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dropped 6.7% to 81,388 units from 87,266 motorcycles in the year-ago quarter. This was due to weakness in the U.S. as well as some international markets.
Harley-Davidson’s sales in the U.S. declined 9.3% to 49,668 motorcycles. International sales went down 2.3% to 31,720 motorcycles from 32,480 motorcycles in the prior-year quarter. A minor improvement of 0.4% in sales in Canada was offset by a 9.3% plunge in the U.S., 8.5% decline in Latin America, 1.6% in the Middle East and Africa (EMEA) region, plus 3.2% dip in the Asia-Pacific region.
Revenues from Parts and Accessories fell 8% to $237.5 million, while revenues from General Merchandise — including MotorClothes apparel and accessories — tumbled 16.8% to $63 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment dipped 1.5% to $188.1 million in the second quarter of 2017. Operating income declined 8.5% to $81.9 million from the year-ago figure of $89.6 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $988.5 million as of Jun 25, 2017, compared with $864.7 billion as of Jun 26, 2016. Long-term debt slid to $4.68 billion from $5.31 billion as of Jun 26, 2016.
For the six-months ended on Jun 25 2017, Harley-Davidson’s operating cash inflow improved to $627.1 million from $456.3 million. Capital expenditures diminished to $69.8 million from $107.5 million in the year-ago period.
Share Repurchases
Harley-Davidson spent $163.2 million to repurchase 3 million shares in second-quarter 2017. As of second-quarter end, it had authorization to buy back another 15 million shares.
Looking Forward
Harley-Davidson changed its expectation of motorcycle shipments to declining unit sales for 2017, as against the previous expectation of flat in 2016. The company expects to ship 241,000- 246,000 units in 2017, roughly reflecting a 6-8% decline from 2016.
In the third quarter of 2017, the motor company expects to dispatch around 39,000-44,000 motorcycles, representing a decline of 10-20% from the year-ago period.
The company altered its projection of operating margin for 2017, as against the previous expectation of a similar figure in 2016. It expects the operating margin to weaken 1% from the 2016 levels. Also, it expects capital expenditures of worth $200–$220 million this year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 47.8% due to these changes.
Harley-Davidson, Inc. Price and Consensus
Harley-Davidson, Inc. Price and Consensus | Harley-Davidson, Inc. Quote
VGM Scores
At this time, Harley-Davidson's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.