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Goldman Sachs Rated Harman International a ‘Buy’

Gabriel Kane

Yesterday’s Consumer Pops and Drops: BMS, VC, ADM, HAR, and BLL

(Continued from Prior Part)

Price movement 

Harman International Industries (HAR) has a market cap of $6.3 billion. It rose by 2.3% and closed at $89.04 per share on March 31, 2016. The price movements on a weekly, monthly, and YTD (year-to-date) basis were 4.6%, 12.2%, and -5.0%, respectively.

Currently, Harman is trading 6.8% above its 20-day moving average, 14.7% above its 50-day moving average, and 7.8% below its 200-day moving average.

The Guggenheim Raymond James SB-1 Equity ETF (RYJ) invests 0.71% of its holdings in Harman. RYJ tracks an equal-weighted index of US-listed stocks that analysts expect to achieve a 15% total return and outperform S&P 500 over the next six to 12 months. RYJ’s YTD price movement was -0.12% as of March 30, 2016.

The iShares Morningstar Mid-Cap Growth Index Fund (JKH) invests 0.50% of its holdings in Harmon. JKH tracks a market-cap-weighted index of mid-cap companies selected by Morningstar based on their growth characteristics.

The competitors of Harman International Industries (HAR) and their market caps are:

  • Delphi Automotive (DLPH) – $20.7 billion
  • Lear Corporation (LEA) – $8.3 billion

Goldman Sachs rated Harman a “buy”

Goldman Sachs initiated the coverage of Harman International Industries with a “buy” rating. It set the price target at $110.0 per share.

Performance in 2Q16

Harman International Industries reported fiscal 2Q16 net sales of $1,772.2 million—a rise of 11.9% compared to net sales of $1,583.5 million in fiscal 2Q15. The sales of connected car and lifestyle audio rose by 2.1% and 20.4%, respectively. The sales of professional solutions fell by 6.7% in fiscal 2Q16. The company’s cost of sales as a percentage of net sales and gross profit rose by 1.5% and 10.5%, respectively, in fiscal 2Q16—compared to fiscal 2Q15. Its non-GAAP (generally accepted accounting principles) net income and non-GAAP earnings per share rose to $134.2 million and $1.84, respectively, in fiscal 2Q16—compared to $126.0 million and $1.79, respectively, in fiscal 2Q15.

Meanwhile, its cash and cash equivalents fell by 32.6% and its inventories rose by 26.2% in fiscal 2Q16—compared to fiscal 4Q15. Its current ratio rose to 1.43x and its DE (debt-to-equity) ratio fell to 1.36x in fiscal 2Q16—compared to a current ratio and DE ratio of 1.36x and 1.45x in fiscal 4Q15.

Harmon’s price-to-earnings and price-to-book value ratios are 18.8x and 2.6x, respectively, as of March 31, 2016.

Next, we’ll take a look at Ball Corporation.

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