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Why Is Harley-Davidson (HOG) Down 6.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have lost about 6.1% 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 Q4 Earrnings Top Estimates
Harley-Davidson came out with quarterly earnings of 9 cents per share, beating the Zacks Consensus Estimate of 5 cents per share. This outperformance resulted from higher-than-expected motorcycle sales in the Asia Pacific region. Precisely, retail motorcycle sales in the Asia-Pacific region totaled 7,691 units, topping the consensus mark of 7,348 units.
The company’s net income amounted to $13.5 million compared with the year-ago quarter’s $495,000.
Total revenues from Motorcycle and Related products, which form bulk of overall revenues of the firm, declined 8.5% year over year to $874.1million in the reported quarter. The top line also missed the Zacks Consensus Estimate of $930 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.07 billion, declining 6.5% year over year.
Segmental Highlights
Motorcycles and Related Products: In the fourth quarter, operating loss from the Motorcycles and Related Products segment amounted to $46.4 million, narrower than a loss of $59.5 million reported in the year-ago period. Higher sales from the Asia-Pacific region and lower operating costs from the company's manufacturing-optimization initiativecan be attributed to the same.
In the quarter ended Dec 31, 2019, it shipped 40,454 motorcycles, down 7% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold edged down 1.4% to 38,754 from 39,311 in the year-ago quarter. Harley-Davidson’s retail motorcycle units sold in the United States also declined 3.1% from the year-ago quarter to 20,204. International units sold increased 0.5% to 18,550 motorcycles from 18,462 in the prior-year quarter. Sales in the Middle East and Africa, Canada and Latin America declined 2.3%, 14.1% and 0.1%, respectively. Nonetheless, in the Asia Pacific, sales increased 6.2% from the year-ago period.
Revenues for Parts & Accessories fell 9.1% from a year ago to $129.3 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 2.2% from the prior-year quarter to $57.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.2 million from the prior-year quarter’s $190.2 million. However, operating income declined 7% to $58.8 million from $63.3 million in the year-ago quarter.
Financial Position
Harley-Davidson had cash and cash equivalents of 833.8 million as of Dec 31, 2019. Net long-term debt increased to $5,124 million from $4,887 million in the year-ago period.Its debt-to capital ratio was 74% at the end of the quarter.
During the year, the American motorcycle maker bought back $286.7 million shares and hiked payout by 1.4% to $1.50 per share.
As of Dec 31, 2019, the company’s net operating cash inflow was $868.3 million compared with $1,206 million on Dec 31, 2018. Capital expenditure in 2019 was $181.4 million compared with $213.5 million recorded in 2018.
Looking Forward
For full-year 2020, Harley-Davidson projects Motorcycle segment revenues in the band of $4.53-$4.66 billion. For first-quarter 2020, it expects Motorcycle segment revenues within $1.09-$1.17 billion.
The motorcycles segment operating margin, as a percentage of revenues, is expected in the band of 7-8% for the full year. Operating income from the Financial Services segment is expected to be flat year over year. Capex is projected between $215 million and $235 million
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -27.17% due to these changes.
VGM Scores
Currently, Harley-Davidson has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 this revision 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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Why Is Harley-Davidson (HOG) Down 6.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have lost about 6.1% 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 Q4 Earrnings Top Estimates
Harley-Davidson came out with quarterly earnings of 9 cents per share, beating the Zacks Consensus Estimate of 5 cents per share. This outperformance resulted from higher-than-expected motorcycle sales in the Asia Pacific region. Precisely, retail motorcycle sales in the Asia-Pacific region totaled 7,691 units, topping the consensus mark of 7,348 units.
The company’s net income amounted to $13.5 million compared with the year-ago quarter’s $495,000.
Total revenues from Motorcycle and Related products, which form bulk of overall revenues of the firm, declined 8.5% year over year to $874.1million in the reported quarter. The top line also missed the Zacks Consensus Estimate of $930 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.07 billion, declining 6.5% year over year.
Segmental Highlights
Motorcycles and Related Products: In the fourth quarter, operating loss from the Motorcycles and Related Products segment amounted to $46.4 million, narrower than a loss of $59.5 million reported in the year-ago period. Higher sales from the Asia-Pacific region and lower operating costs from the company's manufacturing-optimization initiativecan be attributed to the same.
In the quarter ended Dec 31, 2019, it shipped 40,454 motorcycles, down 7% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold edged down 1.4% to 38,754 from 39,311 in the year-ago quarter. Harley-Davidson’s retail motorcycle units sold in the United States also declined 3.1% from the year-ago quarter to 20,204. International units sold increased 0.5% to 18,550 motorcycles from 18,462 in the prior-year quarter. Sales in the Middle East and Africa, Canada and Latin America declined 2.3%, 14.1% and 0.1%, respectively. Nonetheless, in the Asia Pacific, sales increased 6.2% from the year-ago period.
Revenues for Parts & Accessories fell 9.1% from a year ago to $129.3 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 2.2% from the prior-year quarter to $57.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.2 million from the prior-year quarter’s $190.2 million. However, operating income declined 7% to $58.8 million from $63.3 million in the year-ago quarter.
Financial Position
Harley-Davidson had cash and cash equivalents of 833.8 million as of Dec 31, 2019. Net long-term debt increased to $5,124 million from $4,887 million in the year-ago period.Its debt-to capital ratio was 74% at the end of the quarter.
During the year, the American motorcycle maker bought back $286.7 million shares and hiked payout by 1.4% to $1.50 per share.
As of Dec 31, 2019, the company’s net operating cash inflow was $868.3 million compared with $1,206 million on Dec 31, 2018. Capital expenditure in 2019 was $181.4 million compared with $213.5 million recorded in 2018.
Looking Forward
For full-year 2020, Harley-Davidson projects Motorcycle segment revenues in the band of $4.53-$4.66 billion. For first-quarter 2020, it expects Motorcycle segment revenues within $1.09-$1.17 billion.
The motorcycles segment operating margin, as a percentage of revenues, is expected in the band of 7-8% for the full year. Operating income from the Financial Services segment is expected to be flat year over year. Capex is projected between $215 million and $235 million
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -27.17% due to these changes.
VGM Scores
Currently, Harley-Davidson has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 this revision 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.