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Harley-Davidson (HOG) Up 10.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have added about 10.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Harley-Davidson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Harley-Davidson Slips to Q4 Loss
Harley-Davidson reported fourth-quarter adjusted loss of 63 cents per share. The Zacks Consensus Estimate for profit was pegged at 10 cents. The bottom line also compares unfavorably with the year-ago earnings of 9 cents a share. Higher-than-anticipated loss from the Motorcycles and Related Products segment resulted in this dismal performance.
The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $725 million, down 32% from the year-earlier quarter’s $1,072 million. Notably, revenues from the Motorcycle & Related Products unit came in at $531 million, missing the consensus mark of $789 million by a wide margin.
Segmental Highlights
Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute bulk of the firm’s overall revenues, plunged 39% year over year to $531 million in the reported quarter. This decline was primarily due to lower wholesale shipments compared to the prior year on account of the company’s aggressive approach to supply and inventory management and the shift in timing of the roll-out of new model year motorcycles from August each year to early first quarter in a bid to better align with seasonality.
Further, the segment posted an operating loss of $196 million, much wider than the loss of $46 million reported in the prior-year quarter. The operating loss also came in wider than the consensus mark of $41.5 million.
For the December-end quarter, revenues from the sale of motorcycles came in at $319.9 million, slumping almost 52% year on year. The company shipped 20,921 motorcycles worldwide, significantly down 48.3% year over year.
For the October-December quarter, Harley-Davidson retailed 33,925 motorcycle units globally, down 14.1% year over year. The company’s retail motorcycle units sold in the United States slid 14.5% from the year-ago quarter to 17,274. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 2.2%, 9.6%, 30.2% and 50.9%, respectively, from the year-ago period.
Nonetheless, revenues for Parts & Accessories (P&A) were up 13.3% from the prior year to $146.4 million. However, revenues for General Merchandise (GM) — including Motor Clothes apparel and accessories — dropped 13% from the prior-year quarter to $49.7 million.
Financial Services: Revenues for Harley-Davidson Financial Services decreased to $194 million, down 2% year on year. The reported figure is, nonetheless, in line with the Zacks Consensus Estimate. Operating income jumped 31% year on year to $77 million on lower provisions, aided by reduced actual losses at the end of the fourth quarter.
Financial Position
During the December-end quarter, selling, general and administrative expenses (SG&A) increased to $276.4 million from the $266.4 million witnessed in fourth-quarter 2019.
Harley-Davidson had cash and cash equivalents of $3,257.2 million as of Dec 31, 2020, compared with the $833.9 million recorded at the end of 2019. Net long-term debt increased to $5,932.9 million from the year-ago period’s $5,124.8 million.
The firm generated $1,177.9 million of cash from operating activities during 2020 compared with the prior year’s $868.3 million. Capital expenditure during the year totaled $131 million compared with the $181.4 million recorded in 2019. The company also paid dividends of 44 cents per share for full-year 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.62% due to these changes.
VGM Scores
At this time, Harley-Davidson has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Harley-Davidson (HOG) Up 10.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have added about 10.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Harley-Davidson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Harley-Davidson Slips to Q4 Loss
Harley-Davidson reported fourth-quarter adjusted loss of 63 cents per share. The Zacks Consensus Estimate for profit was pegged at 10 cents. The bottom line also compares unfavorably with the year-ago earnings of 9 cents a share. Higher-than-anticipated loss from the Motorcycles and Related Products segment resulted in this dismal performance.
The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $725 million, down 32% from the year-earlier quarter’s $1,072 million. Notably, revenues from the Motorcycle & Related Products unit came in at $531 million, missing the consensus mark of $789 million by a wide margin.
Segmental Highlights
Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute bulk of the firm’s overall revenues, plunged 39% year over year to $531 million in the reported quarter. This decline was primarily due to lower wholesale shipments compared to the prior year on account of the company’s aggressive approach to supply and inventory management and the shift in timing of the roll-out of new model year motorcycles from August each year to early first quarter in a bid to better align with seasonality.
Further, the segment posted an operating loss of $196 million, much wider than the loss of $46 million reported in the prior-year quarter. The operating loss also came in wider than the consensus mark of $41.5 million.
For the December-end quarter, revenues from the sale of motorcycles came in at $319.9 million, slumping almost 52% year on year. The company shipped 20,921 motorcycles worldwide, significantly down 48.3% year over year.
For the October-December quarter, Harley-Davidson retailed 33,925 motorcycle units globally, down 14.1% year over year. The company’s retail motorcycle units sold in the United States slid 14.5% from the year-ago quarter to 17,274. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 2.2%, 9.6%, 30.2% and 50.9%, respectively, from the year-ago period.
Nonetheless, revenues for Parts & Accessories (P&A) were up 13.3% from the prior year to $146.4 million. However, revenues for General Merchandise (GM) — including Motor Clothes apparel and accessories — dropped 13% from the prior-year quarter to $49.7 million.
Financial Services: Revenues for Harley-Davidson Financial Services decreased to $194 million, down 2% year on year. The reported figure is, nonetheless, in line with the Zacks Consensus Estimate. Operating income jumped 31% year on year to $77 million on lower provisions, aided by reduced actual losses at the end of the fourth quarter.
Financial Position
During the December-end quarter, selling, general and administrative expenses (SG&A) increased to $276.4 million from the $266.4 million witnessed in fourth-quarter 2019.
Harley-Davidson had cash and cash equivalents of $3,257.2 million as of Dec 31, 2020, compared with the $833.9 million recorded at the end of 2019. Net long-term debt increased to $5,932.9 million from the year-ago period’s $5,124.8 million.
The firm generated $1,177.9 million of cash from operating activities during 2020 compared with the prior year’s $868.3 million. Capital expenditure during the year totaled $131 million compared with the $181.4 million recorded in 2019. The company also paid dividends of 44 cents per share for full-year 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.62% due to these changes.
VGM Scores
At this time, Harley-Davidson has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.