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Harley-Davidson (HOG) Up 8.7% 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 8.7% 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 drivers.
Harley-Davidson Swings to Q1 Profit
Harley-Davidson reported first-quarter adjusted earnings of $1.68 per share, handily beating the Zacks Consensus Estimate of 79 cents. The bottom line also compares favorably with the year-ago earnings of 45 cents a share. Higher-than-anticipated income from both Motorcycles & Related Products as well as Financial Services segments resulted in this outperformance.
The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1,423 million, up 10% from the year-earlier quarter. Revenues from the Motorcycle & Related Products unit came in at $1,232 million, topping the consensus mark of $1,218 million.
Shares of the motorcycle giant rose 9.68% to close the session at $44.29, thanks to strong quarterly results. Investors are also encouraged by the firm’s upward revision of its guidance for 2021. Before delving into the revised guidance, let’s glance through first-quarter 2021 segmental performances and financial position of the company.
Segmental Highlights
Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute bulk of the firm’s overall revenues, grew 12% year over year to $1,232 million for the reported quarter. This upside was primarily due to higher wholesale shipments and favorable product mix. Further, the segment posted an operating profit of $228 million, which reflects year-over-year growth of 169% owing to higher revenues and operational efficiency. The metric also surpassed the Zacks Consensus Estimate of $131 million.
For the March-end quarter, revenues from the sale of motorcycles came in at $1,016 million, up 13% year over year. The company shipped 54,800 motorcycles worldwide, up 3% year over year.
During the quarter under review, Harley-Davidson retailed 44,235 motorcycle units globally, up 9% year over year. The company’s retail motorcycle units sold in the United States grew 30.5% from the year-ago quarter to 30,983. Meanwhile, sales in the EMEA (Europe, Middle East and Africa) and Latin America declined 36% and 59%, respectively, from the year-ago period. Sales in Asia Pacific, however, grew 1% year over year to 5,793 units.
Revenues for Parts & Accessories were up 11% from the prior year to $150 million. Revenues for General Merchandise — including Motor Clothes apparel and accessories — also edged up 2% from the prior-year quarter to $50 million.
Financial Services: Revenues for Harley-Davidson Financial Services totaled $190 million, down 4% year on year. However, operating income jumped a whopping 417% year on year to $119 million due to lower provisions for credit losses. The metric also beat the consensus mark of $47.30 million.
Financial Position
During the March-end quarter, selling, general and administrative expenses decreased to $193.5 million from $234.3 million witnessed in first-quarter 2020.
Harley-Davidson had cash and cash equivalents of $2,320.6 million as of Mar 28, 2021 compared with $3,257.2 million recorded at 2020-end. Long-term debt decreased to $5,478.1 million from $5,932.9 million recorded as of Dec 31, 2020.
The firm generated $162 million of cash from operating activities during first-quarter 2021. Capital expenditure during the year totaled $18.8 million. As such, the firm generated free cash flow (FCF) of around $144 million for the quarter under review versus negative FCF in the comparable year-ago period. The company also paid dividends of 15 cents per share in first-quarter 2021.
Raised 2021 Guidance
Encouraged by strong first-quarter results, Harley Davidson — which currently sports a Zacks Rank #1 (Strong Buy) — raised full-year 2021 view. The company now envisions the motorcycles segment’s revenues to grow in the band of 30-35% versus the prior guidance range of 20-25%. Operating income margin expectation for the segment marks an improvement of 200 basis points from the prior guidance. However, in the event of inability to mitigate additional EU tariffs, operating income margin is expected at 5-7%. Operating income growth for Financial Services is now forecast within 50-60%, reflecting an uptick from the prior growth projection of 10-15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 20.03% due to these changes.
VGM Scores
At this time, Harley-Davidson has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Harley-Davidson has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Harley-Davidson (HOG) Up 8.7% 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 8.7% 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 drivers.
Harley-Davidson Swings to Q1 Profit
Harley-Davidson reported first-quarter adjusted earnings of $1.68 per share, handily beating the Zacks Consensus Estimate of 79 cents. The bottom line also compares favorably with the year-ago earnings of 45 cents a share. Higher-than-anticipated income from both Motorcycles & Related Products as well as Financial Services segments resulted in this outperformance.
The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1,423 million, up 10% from the year-earlier quarter. Revenues from the Motorcycle & Related Products unit came in at $1,232 million, topping the consensus mark of $1,218 million.
Shares of the motorcycle giant rose 9.68% to close the session at $44.29, thanks to strong quarterly results. Investors are also encouraged by the firm’s upward revision of its guidance for 2021. Before delving into the revised guidance, let’s glance through first-quarter 2021 segmental performances and financial position of the company.
Segmental Highlights
Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute bulk of the firm’s overall revenues, grew 12% year over year to $1,232 million for the reported quarter. This upside was primarily due to higher wholesale shipments and favorable product mix. Further, the segment posted an operating profit of $228 million, which reflects year-over-year growth of 169% owing to higher revenues and operational efficiency. The metric also surpassed the Zacks Consensus Estimate of $131 million.
For the March-end quarter, revenues from the sale of motorcycles came in at $1,016 million, up 13% year over year. The company shipped 54,800 motorcycles worldwide, up 3% year over year.
During the quarter under review, Harley-Davidson retailed 44,235 motorcycle units globally, up 9% year over year. The company’s retail motorcycle units sold in the United States grew 30.5% from the year-ago quarter to 30,983. Meanwhile, sales in the EMEA (Europe, Middle East and Africa) and Latin America declined 36% and 59%, respectively, from the year-ago period. Sales in Asia Pacific, however, grew 1% year over year to 5,793 units.
Revenues for Parts & Accessories were up 11% from the prior year to $150 million. Revenues for General Merchandise — including Motor Clothes apparel and accessories — also edged up 2% from the prior-year quarter to $50 million.
Financial Services: Revenues for Harley-Davidson Financial Services totaled $190 million, down 4% year on year. However, operating income jumped a whopping 417% year on year to $119 million due to lower provisions for credit losses. The metric also beat the consensus mark of $47.30 million.
Financial Position
During the March-end quarter, selling, general and administrative expenses decreased to $193.5 million from $234.3 million witnessed in first-quarter 2020.
Harley-Davidson had cash and cash equivalents of $2,320.6 million as of Mar 28, 2021 compared with $3,257.2 million recorded at 2020-end. Long-term debt decreased to $5,478.1 million from $5,932.9 million recorded as of Dec 31, 2020.
The firm generated $162 million of cash from operating activities during first-quarter 2021. Capital expenditure during the year totaled $18.8 million. As such, the firm generated free cash flow (FCF) of around $144 million for the quarter under review versus negative FCF in the comparable year-ago period. The company also paid dividends of 15 cents per share in first-quarter 2021.
Raised 2021 Guidance
Encouraged by strong first-quarter results, Harley Davidson — which currently sports a Zacks Rank #1 (Strong Buy) — raised full-year 2021 view. The company now envisions the motorcycles segment’s revenues to grow in the band of 30-35% versus the prior guidance range of 20-25%. Operating income margin expectation for the segment marks an improvement of 200 basis points from the prior guidance. However, in the event of inability to mitigate additional EU tariffs, operating income margin is expected at 5-7%. Operating income growth for Financial Services is now forecast within 50-60%, reflecting an uptick from the prior growth projection of 10-15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 20.03% due to these changes.
VGM Scores
At this time, Harley-Davidson has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Harley-Davidson has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.