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Key Predictions for Harley-Davidson's (HOG) Q2 Earnings

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Harley-Davidson Inc. (HOG - Free Report) is slated to release second-quarter 2021 results on Jul 21, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.15 a share and $1.37 billion, respectively.

In the last reported quarter, the U.S. motorcycle giant reported adjusted earnings of $1.68 per share, handily beating the Zacks Consensus Estimate of 79 cents on the back of higher-than-anticipated income from both Motorcycles & Related Products as well as Financial Services segments.

Over the trailing four quarters, the company beat earnings estimates on two occasions for as many misses, with the average negative surprise being 365.7%. This is depicted in the graph below:

HarleyDavidson, Inc. Price and EPS Surprise

HarleyDavidson, Inc. Price and EPS Surprise

HarleyDavidson, Inc. price-eps-surprise | HarleyDavidson, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Harley-Davidson’s second-quarter earnings per share has remained unrevised in the past 30 days. The bottom-line projection indicates a massive turnaround from the year-ago period’s loss of 60 cents a share. The Zacks Consensus Estimate for quarterly revenues also suggests a year-over-year surge of 104.3%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Harley-Davidson this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: It has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Harley-Davidson currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Efforts to rebrand itself, improve product mix and cater better to younger generations are likely to have benefited Harley-Davidson’s sales in the quarter to be reported. Also, with the economy on the recovery track, thanks to massive fiscal stimulus and widespread inoculation drive, motorcycle sales of the firm are expected to have soared from the year-ago quarter, which was badly hit by the pandemic-led sluggish demand.

Evidently, the Zacks Consensus Estimate for motorcycle units retailed in the United States for second-quarter 2021 is pegged at 42,309, suggesting an uptick from 31,340. The consensus mark for retail sales in the Asia Pacific and EMEA regions also point to year-over-year growth of around 15% each. The consensus estimate for total worldwide retail sales is 66,887 units, indicating an increase from 52,712 units sold in second-quarter 2020. As such, the consensus mark for revenues from the Motorcycle & Related Products unit is pegged at $1,381 million, signaling whopping growth of 106.4% year over year.

The firm’s Rewire turnaround plan led to efficiency and effectiveness across all functions. This is likely to get reflected in its operating profit. The Zacks Consensus Estimate for operating profit from the Motorcycle & Related Products segment stands at $177 million, suggesting a turnaround from a loss of $121 million incurred in the comparable quarter of 2020.

On the flip side, Harley-Davidson’s high capex requirements associated with product innovation and digital advancement are likely to have strained its already weak financials and limited cash flows. High commodity costs are also anticipated to have weighed on the company’s gross profit in second-quarter 2021.

Stocks With Favorable Combinations

Here are a few auto stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Tesla (TSLA - Free Report) has an Earnings ESP of +5.85% and carries a Zacks Rank #2 at present. The company is set to announce second-quarter 2021 results on Jul 26.

PACCAR (PCAR - Free Report) has an Earnings ESP of +1.81% and holds a Zacks Rank #3 at present. The company is scheduled to announce fourth-quarter 2020 results on Jul 27.

Cummins (CMI - Free Report) has an Earnings ESP of +2.51% and carries a Zacks Rank #3 at present. The company is slated to announce second-quarter 2021 results on Aug 3.


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