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Can Harley-Davidson (HOG) Run Higher on Rising Earnings Estimates?

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Investors might want to bet on Harley-Davidson (HOG - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The upward trend in estimate revisions for this motorcycle maker reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Harley-Davidson, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $1.39 per share, which is a change of +32.38% from the year-ago reported number.

The Zacks Consensus Estimate for Harley-Davidson has increased 10.98% over the last 30 days, as three estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $4.48 per share, representing a year-over-year change of +6.92%.

The revisions trend for the current year also appears quite promising for Harley-Davidson, with six estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 7.74%.

Favorable Zacks Rank

The promising estimate revisions have helped Harley-Davidson earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Harley-Davidson have attracted decent investments and pushed the stock 13.5% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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