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Harley-Davidson (HOG) Down 10.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Harley-Davidson 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 drivers.
Harley-Davidson’s Q2 Earnings Beat Estimates, Down Y/Y
Harley-Davidson, Inc. delivered earnings per share of $1.23 in second-quarter 2019, which surpassed the Zacks Consensus Estimate of $1.22. In the prior-year quarter, the figure amounted to $1.45 per share.
The company’s net income amounted to $195.6 million compared with $242.3 million in the year-ago quarter.
Revenues in the Motorcycle and Related Products segment declined 6% year over year to $1.43 billion in the reported quarter, which missed the Zacks Consensus Estimate of $1.45 billion. Segmental revenues amounted to $1.53 billion in the year-ago quarter. The company reported consolidated revenues of $1.63 billion, which declined from the prior-year quarter’s number of $1.71 billion. The downside was primarily caused by declining worldwide retail unit sale.
Motorcycles and Related Products
In the second quarter, operating income from the Motorcycles and Related Products segment amounted to $180.7 million compared with $243.4 million in the year-ago quarter. The decline was primarily due to lower revenues and higher tariff costs, partially offset by lower SG&A.
In the quarter ending on Jun 30, 2019, the company shipped 68,757 motorcycles compared with 72,593 in second-quarter 2018.
Harley-Davidson’s retail motorcycle units sold in the United States declined 8% to 42,762. International units sold fell 8.9% to 29,084 motorcycles from 31,938 in the prior-year quarter. During the reported quarter, the company witnessed sales decline across all the markets. Sales in the Middle East and Africa (EMEA), the Asia Pacific, Latin America, and Canada declined 12.5%, 0.6%, 2.1% and 13.9%, respectively.
Harley-Davidson’s worldwide retail motorcycle units sold declined 8.4% to 71,846 from 78,428 in the year-ago quarter.
Revenues in the Parts & Accessories segment fell 4.2% to $221.3 million. Moreover, the metric for General Merchandise — including Motor Clothes apparel and accessories — fell 5.8% to $64.6 million.
Harley-Davidson Financial Services
Revenues for Harley-Davidson Financial Services (“HDFS”) amounted to $198.6 million compared with $188.1 million in the prior-year quarter. Operating income declined 6.2% to $75.5 million from $80.5 million in the year-ago quarter.
Financial Position
Harley-Davidson had cash and cash equivalents of $924.6 million as of Jun 30 compared with $978.7 million as of Jul 1, 2018. Net long-term debt declined to $4.65 billion from $4.86 billion as of Jul 1, 2018.
At the end of the first half of 2019, the company’s net operating cash inflow was $496.2 million compared with $735.9 million in the first half of 2018. Capital expenditure was $83.2 million compared with $69.2 million in the prior-year period.
Looking Forward
For 2019, Harley-Davidson reiterated full-year motorcycle shipments projection in the range of 212,000-217,000 motorcycles. For third-quarter 2019, it expects motorcycle shipments to be approximately 43,000 to 48,000.
Motorcycles segment operating margin, as a percentage of revenues, is expected in the band of 6-7% for the full year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -15.62% due to these changes.
VGM Scores
At this time, Harley-Davidson has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Harley-Davidson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Harley-Davidson (HOG) Down 10.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Harley-Davidson 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 drivers.
Harley-Davidson’s Q2 Earnings Beat Estimates, Down Y/Y
Harley-Davidson, Inc. delivered earnings per share of $1.23 in second-quarter 2019, which surpassed the Zacks Consensus Estimate of $1.22. In the prior-year quarter, the figure amounted to $1.45 per share.
The company’s net income amounted to $195.6 million compared with $242.3 million in the year-ago quarter.
Revenues in the Motorcycle and Related Products segment declined 6% year over year to $1.43 billion in the reported quarter, which missed the Zacks Consensus Estimate of $1.45 billion. Segmental revenues amounted to $1.53 billion in the year-ago quarter. The company reported consolidated revenues of $1.63 billion, which declined from the prior-year quarter’s number of $1.71 billion. The downside was primarily caused by declining worldwide retail unit sale.
Motorcycles and Related Products
In the second quarter, operating income from the Motorcycles and Related Products segment amounted to $180.7 million compared with $243.4 million in the year-ago quarter. The decline was primarily due to lower revenues and higher tariff costs, partially offset by lower SG&A.
In the quarter ending on Jun 30, 2019, the company shipped 68,757 motorcycles compared with 72,593 in second-quarter 2018.
Harley-Davidson’s retail motorcycle units sold in the United States declined 8% to 42,762. International units sold fell 8.9% to 29,084 motorcycles from 31,938 in the prior-year quarter. During the reported quarter, the company witnessed sales decline across all the markets. Sales in the Middle East and Africa (EMEA), the Asia Pacific, Latin America, and Canada declined 12.5%, 0.6%, 2.1% and 13.9%, respectively.
Harley-Davidson’s worldwide retail motorcycle units sold declined 8.4% to 71,846 from 78,428 in the year-ago quarter.
Revenues in the Parts & Accessories segment fell 4.2% to $221.3 million. Moreover, the metric for General Merchandise — including Motor Clothes apparel and accessories — fell 5.8% to $64.6 million.
Harley-Davidson Financial Services
Revenues for Harley-Davidson Financial Services (“HDFS”) amounted to $198.6 million compared with $188.1 million in the prior-year quarter. Operating income declined 6.2% to $75.5 million from $80.5 million in the year-ago quarter.
Financial Position
Harley-Davidson had cash and cash equivalents of $924.6 million as of Jun 30 compared with $978.7 million as of Jul 1, 2018. Net long-term debt declined to $4.65 billion from $4.86 billion as of Jul 1, 2018.
At the end of the first half of 2019, the company’s net operating cash inflow was $496.2 million compared with $735.9 million in the first half of 2018. Capital expenditure was $83.2 million compared with $69.2 million in the prior-year period.
Looking Forward
For 2019, Harley-Davidson reiterated full-year motorcycle shipments projection in the range of 212,000-217,000 motorcycles. For third-quarter 2019, it expects motorcycle shipments to be approximately 43,000 to 48,000.
Motorcycles segment operating margin, as a percentage of revenues, is expected in the band of 6-7% for the full year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -15.62% due to these changes.
VGM Scores
At this time, Harley-Davidson has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Harley-Davidson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.