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Harley-Davidson (HOG) Misses on Q4 Earnings, View Weak
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Harley-Davidson, Inc. (HOG - Free Report) reported earnings of 27 cents per share in the fourth quarter of 2016, which missed the Zacks Consensus Estimate of 32 cents. However, earnings were higher than 22 cents recorded in the year-ago quarter.
Net income increased to $47.2 million from $42.2 million recorded a year ago.
Operating revenues (excluding financial services) declined to $933 million in the fourth quarter of 2016 from $1.01 billion recorded in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $986 million. Harley-Davidson logged consolidated revenues of $1.11 billion, which deteriorated from $1.18 billion posted a year ago.
Operating income increased to $69.4 million from $67.2 million in the year-ago period.
Harley-Davidson reported earnings of $3.83 per share in 2016, up from $3.69 per share earned in 2015. However, earnings per share missed the Zacks Consensus Estimate of $3.88.
Net income fell to $692.2 million from $752.2 million recorded a year ago. Operating revenues (excluding financial services) decreased to $5.27 billion from $5.31 billion in 2015, also missing the Zacks Consensus Estimate of $5.38 billion.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Revenues from Motorcycles and Related Products dropped to $933 million in the fourth quarter of 2016 from $1.01 billion recorded in the year-ago quarter. The decline was due to lower motorcycle shipments.
Operating income from Motorcycles and Related Products increased significantly to $9.27 million from $6.37 million a year ago.
Revenues from Harley-Davidson motorcycles fell 8.8% to $685.05 million. The company shipped 42,414 motorcycles to dealers and distributors worldwide during the fourth quarter of 2016, compared with 48,149 shipments in the fourth quarter of 2015.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dipped 0.5% to 46,610 units from 46,857 motorcycles sold in the year-ago quarter. The decline was due to weakness in some international markets. Harley-Davidson’s sales in the U.S. inched up 0.1% to 26,077 motorcycles. International sales went down 1.3% to 20,533 motorcycles from 20,813 motorcycles sold in the prior-year quarter. An improvement of 2.6% in sales in the Europe, Middle East, and Africa (EMEA) region, and 0.2% in Canada was offset by a 14.4% decline in the Latin America region and 0.4% in the Asia-Pacific region.
Revenues from Parts and Accessories dropped 0.2% to $169.4 million, while revenues from General Merchandise – which includes MotorClothes apparel and accessories – fell 8.1% to $72.9 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment improved 2.3% to $177.6 million in the fourth quarter of 2016. Operating income however declined 1.2% to $60.1 million from the year-ago figure of $60.9 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $760 million as of Dec 31, 2016, compared with $722.2 billion as of Dec 31, 2015. Total debt fell to $6.81 billion from $6.87 billion as of Dec 31, 2015.
In 2016, Harley-Davidson’s operating cash flow improved to $1.17 billion from $1.10 billion in 2015. Capital expenditures decreased to $256.3 million from $260 million in 2015.
Share Repurchases
Harley-Davidson spent $459.1 million to repurchase 9.7 million shares in 2016. As of 2016-end, it had authorization to buy back another 19.3 million shares.
Looking Forward
Harley-Davidson expects motorcycle shipments in 2017 to be either the same or slightly lower than 2016.
In the first quarter of 2017, Harley-Davidson expects to ship 66,000 to 71,000 motorcycles, compared with 83,036 motorcycles shipped in the year-ago period.
The company also projects operating margin and gross margin to be similar to the 2016 levels. It expects capital expenditures of $200–$220 million this year.
Price Performance
Harley-Davidson underperformed the Zacks categorized Automotive-Domestic industry over the last three months owing to the impact of weak operating results for the third quarter (reported on Oct 18, 2016) and unfavorable outlook for the fourth quarter. Harley-Davidson has been facing challenges like heavy discounts by competitors and unfavorable foreign currency exchange. The company has also been struggling to increase the operating income of the Financial Services segment.
The company’s shares gained 1.6% over the last three months, compared with the industry’s 17.4% hike.
Zacks Rank & Key Picks
Currently, Harley-Davidson carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the auto space include Penske Automotive Group, Inc. (PAG - Free Report) , Fox Factory Holding Corp (FOXF - Free Report) and GKN plc .
Fox Factory holds a Zacks Rank #2. The company has an expected earnings growth rate of around 16.6% over the long term.
GKN holds a Zacks Rank #2 and has a long-term growth rate of 6.3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.Be among the very first to see them >>
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Harley-Davidson (HOG) Misses on Q4 Earnings, View Weak
Harley-Davidson, Inc. (HOG - Free Report) reported earnings of 27 cents per share in the fourth quarter of 2016, which missed the Zacks Consensus Estimate of 32 cents. However, earnings were higher than 22 cents recorded in the year-ago quarter.
Net income increased to $47.2 million from $42.2 million recorded a year ago.
Operating revenues (excluding financial services) declined to $933 million in the fourth quarter of 2016 from $1.01 billion recorded in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $986 million. Harley-Davidson logged consolidated revenues of $1.11 billion, which deteriorated from $1.18 billion posted a year ago.
Operating income increased to $69.4 million from $67.2 million in the year-ago period.
2016 Results
Harley-Davidson reported earnings of $3.83 per share in 2016, up from $3.69 per share earned in 2015. However, earnings per share missed the Zacks Consensus Estimate of $3.88.
Net income fell to $692.2 million from $752.2 million recorded a year ago. Operating revenues (excluding financial services) decreased to $5.27 billion from $5.31 billion in 2015, also missing the Zacks Consensus Estimate of $5.38 billion.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Harley-Davidson, Inc. Price, Consensus and EPS Surprise | Harley-Davidson, Inc. Quote
Motorcycles and Related Products
Revenues from Motorcycles and Related Products dropped to $933 million in the fourth quarter of 2016 from $1.01 billion recorded in the year-ago quarter. The decline was due to lower motorcycle shipments.
Operating income from Motorcycles and Related Products increased significantly to $9.27 million from $6.37 million a year ago.
Revenues from Harley-Davidson motorcycles fell 8.8% to $685.05 million. The company shipped 42,414 motorcycles to dealers and distributors worldwide during the fourth quarter of 2016, compared with 48,149 shipments in the fourth quarter of 2015.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dipped 0.5% to 46,610 units from 46,857 motorcycles sold in the year-ago quarter. The decline was due to weakness in some international markets. Harley-Davidson’s sales in the U.S. inched up 0.1% to 26,077 motorcycles. International sales went down 1.3% to 20,533 motorcycles from 20,813 motorcycles sold in the prior-year quarter. An improvement of 2.6% in sales in the Europe, Middle East, and Africa (EMEA) region, and 0.2% in Canada was offset by a 14.4% decline in the Latin America region and 0.4% in the Asia-Pacific region.
Revenues from Parts and Accessories dropped 0.2% to $169.4 million, while revenues from General Merchandise – which includes MotorClothes apparel and accessories – fell 8.1% to $72.9 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment improved 2.3% to $177.6 million in the fourth quarter of 2016. Operating income however declined 1.2% to $60.1 million from the year-ago figure of $60.9 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $760 million as of Dec 31, 2016, compared with $722.2 billion as of Dec 31, 2015. Total debt fell to $6.81 billion from $6.87 billion as of Dec 31, 2015.
In 2016, Harley-Davidson’s operating cash flow improved to $1.17 billion from $1.10 billion in 2015. Capital expenditures decreased to $256.3 million from $260 million in 2015.
Share Repurchases
Harley-Davidson spent $459.1 million to repurchase 9.7 million shares in 2016. As of 2016-end, it had authorization to buy back another 19.3 million shares.
Looking Forward
Harley-Davidson expects motorcycle shipments in 2017 to be either the same or slightly lower than 2016.
In the first quarter of 2017, Harley-Davidson expects to ship 66,000 to 71,000 motorcycles, compared with 83,036 motorcycles shipped in the year-ago period.
The company also projects operating margin and gross margin to be similar to the 2016 levels. It expects capital expenditures of $200–$220 million this year.
Price Performance
Harley-Davidson underperformed the Zacks categorized Automotive-Domestic industry over the last three months owing to the impact of weak operating results for the third quarter (reported on Oct 18, 2016) and unfavorable outlook for the fourth quarter. Harley-Davidson has been facing challenges like heavy discounts by competitors and unfavorable foreign currency exchange. The company has also been struggling to increase the operating income of the Financial Services segment.
The company’s shares gained 1.6% over the last three months, compared with the industry’s 17.4% hike.
Zacks Rank & Key Picks
Currently, Harley-Davidson carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the auto space include Penske Automotive Group, Inc. (PAG - Free Report) , Fox Factory Holding Corp (FOXF - Free Report) and GKN plc .
Penske Automotive has an expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fox Factory holds a Zacks Rank #2. The company has an expected earnings growth rate of around 16.6% over the long term.
GKN holds a Zacks Rank #2 and has a long-term growth rate of 6.3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.Be among the very first to see them >>