Harley-Davidson, Inc. (HOG - Free Report) 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.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
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.
Price Performance
Harley-Davidson underperformed the Zacks categorized Automotive-Domestic industry over the last three months. The company’s shares have declined 7.8% over the last three months, compared with the industry’s 5.4% gain.
Zacks Rank & Key Picks
Currently, Harley-Davidson carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the auto space are Daimler AG , Allison Transmission Holdings Inc. (ALSN - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) , all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daimler has expected long-term growth of 2.8%.
Allison Transmission has expected long-term growth rate of 11%.
Fox Factory has expected long-term growth rate of 15.9%.
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Harley-Davidson, Inc. (HOG - Free Report) 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.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
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.
Price Performance
Harley-Davidson underperformed the Zacks categorized Automotive-Domestic industry over the last three months. The company’s shares have declined 7.8% over the last three months, compared with the industry’s 5.4% gain.
Zacks Rank & Key Picks
Currently, Harley-Davidson carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the auto space are Daimler AG , Allison Transmission Holdings Inc. (ALSN - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) , all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daimler has expected long-term growth of 2.8%.
Allison Transmission has expected long-term growth rate of 11%.
Fox Factory has expected long-term growth rate of 15.9%.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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