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Why Is Harley-Davidson (HOG) Up 1.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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’s Q1 Earnings & Sales Fall Y/Y
Harley-Davidson reported adjusted earnings per share of 51 cents in first-quarter 2020, surpassing the Zacks Consensus Estimate of 48 cents. This outperformance resulted from solid revenues in the company’s Financial Services segment. Sales in the Financial Services segment totaled $198.4 million, topping the consensus mark of $194 million.
The bottom-line figure, however, declined from the prior-year’s 98 cents per share. The company’s net income amounted to $69.7 million compared with the year-ago quarter’s $127.9 million.
Total revenues from Motorcycle and Related products, which form the bulk of overall revenues of the firm, declined 8% year over year to $1099.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $1,017 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.30 billion, down 5.8% year over year.
Segmental Highlights
Motorcycles and Related Products: In the first quarter, operating income from the Motorcycles and Related Products segment amounted to $84.6 million, lower than the operating income of $108.4 million reported in the year-ago period. This decline was mainly due to the temporary suspension of global motorcycle manufacturing in March amid the coronavirus crisis.
In the quarter ended Mar 29, 2020, the company shipped 52,973 motorcycles, down 10.05% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold dropped 17.7% to 40,439 from the year-ago quarter’s 49,151. The company’s retail motorcycle units sold in the United States also declined 15.5% from the year-ago quarter to 23,732. International units sold decreased 20.7% to 16,707 motorcycles from 21,060 in the prior-year quarter. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 28.4%, 5.3%, 24.7% and 21.5%, respectively from the year-ago period.
Revenues for Parts & Accessories fell 15.7% from the prior year to $134.7 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 11.3% from the prior-year quarter to $49.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.4 million from the prior-year quarter’s $188.7 million. However, the operating income slumped 60.9% to $22.9 million from the year-ago quarter’s $58.7 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $1,465 million as of Mar 29, 2020, higher than the $749.6 million reported in the prior-year quarter. Net long-term debt decreased to $4,478 million from the year-ago period’s $4,744 million. Its long-term debt-to-capital ratio was 72.58% at the end of the first quarter.
As of Mar 29, 2020, the company’s net operating cash outflow was $8.58 million compared with $32.67 million as of Mar 31, 2019. Capital expenditure in the quarter was $32.93 million compared with the $35.25 million recorded in 2019.
Cost-Containment Measures Amid Coronavirus Crisis
Harley-Davidson has enforced a number of measures, including a substantial reduction in all non-essential spending, a company-wide hiring freeze, staffing-level adjustments and no merit increments for 2020, in a bid to minimize costs during this period of reduced business. Additionally, the company has suspended discretionary share repurchases. In total, it expects these efforts to preserve around $250 million of cash in 2020.
During second-quarter 2020, the company approved a cash dividend of 2 cents per share, down from the first-quarter 2020 dividend of 38 cents.
2020 Outlook
Harley-Davidson withdrew its 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -55.35% due to these changes.
VGM Scores
At this time, Harley-Davidson has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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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Why Is Harley-Davidson (HOG) Up 1.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Harley-Davidson (HOG - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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’s Q1 Earnings & Sales Fall Y/Y
Harley-Davidson reported adjusted earnings per share of 51 cents in first-quarter 2020, surpassing the Zacks Consensus Estimate of 48 cents. This outperformance resulted from solid revenues in the company’s Financial Services segment. Sales in the Financial Services segment totaled $198.4 million, topping the consensus mark of $194 million.
The bottom-line figure, however, declined from the prior-year’s 98 cents per share. The company’s net income amounted to $69.7 million compared with the year-ago quarter’s $127.9 million.
Total revenues from Motorcycle and Related products, which form the bulk of overall revenues of the firm, declined 8% year over year to $1099.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $1,017 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.30 billion, down 5.8% year over year.
Segmental Highlights
Motorcycles and Related Products: In the first quarter, operating income from the Motorcycles and Related Products segment amounted to $84.6 million, lower than the operating income of $108.4 million reported in the year-ago period. This decline was mainly due to the temporary suspension of global motorcycle manufacturing in March amid the coronavirus crisis.
In the quarter ended Mar 29, 2020, the company shipped 52,973 motorcycles, down 10.05% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold dropped 17.7% to 40,439 from the year-ago quarter’s 49,151. The company’s retail motorcycle units sold in the United States also declined 15.5% from the year-ago quarter to 23,732. International units sold decreased 20.7% to 16,707 motorcycles from 21,060 in the prior-year quarter. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 28.4%, 5.3%, 24.7% and 21.5%, respectively from the year-ago period.
Revenues for Parts & Accessories fell 15.7% from the prior year to $134.7 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 11.3% from the prior-year quarter to $49.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.4 million from the prior-year quarter’s $188.7 million. However, the operating income slumped 60.9% to $22.9 million from the year-ago quarter’s $58.7 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $1,465 million as of Mar 29, 2020, higher than the $749.6 million reported in the prior-year quarter. Net long-term debt decreased to $4,478 million from the year-ago period’s $4,744 million. Its long-term debt-to-capital ratio was 72.58% at the end of the first quarter.
As of Mar 29, 2020, the company’s net operating cash outflow was $8.58 million compared with $32.67 million as of Mar 31, 2019. Capital expenditure in the quarter was $32.93 million compared with the $35.25 million recorded in 2019.
Cost-Containment Measures Amid Coronavirus Crisis
Harley-Davidson has enforced a number of measures, including a substantial reduction in all non-essential spending, a company-wide hiring freeze, staffing-level adjustments and no merit increments for 2020, in a bid to minimize costs during this period of reduced business. Additionally, the company has suspended discretionary share repurchases. In total, it expects these efforts to preserve around $250 million of cash in 2020.
During second-quarter 2020, the company approved a cash dividend of 2 cents per share, down from the first-quarter 2020 dividend of 38 cents.
2020 Outlook
Harley-Davidson withdrew its 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -55.35% due to these changes.
VGM Scores
At this time, Harley-Davidson has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Harley-Davidson has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.