U.S. Markets open in 5 hrs 59 mins

Harley-Davidson's (HOG) Q2 Earnings Beat Estimates, Down Y/Y

Zacks Equity Research

Harley-Davidson, Inc. HOG delivered earnings per share of $1.23 in second-quarter 2019, which surpassed the Zacks Consensus Estimate of $1.22. In the prior-year quarter, the figure amounted to $1.45 per share.

The company’s net income amounted to $195.6 million compared with $242.3 million in the year-ago quarter.

Revenues in the Motorcycle and Related Products segment declined 6% year over year to $1.43 billion in the reported quarter, which missed the Zacks Consensus Estimate of $1.45 billion. Segmental revenues amounted to $1.53 billion in the year-ago quarter. The company reported consolidated revenues of $1.63 billion, which declined from the prior-year quarter’s number of $1.71 billion. The downside was primarily caused by declining worldwide retail unit sale.
 

Harley-Davidson, Inc. Price, Consensus and EPS Surprise

 

Harley-Davidson, Inc. Price, Consensus and EPS Surprise

Harley-Davidson, Inc. price-consensus-eps-surprise-chart | Harley-Davidson, Inc. Quote

 

Motorcycles and Related Products

In the second quarter, operating income from the Motorcycles and Related Products segment amounted to $180.7 million compared with $243.4 million in the year-ago quarter. The decline was primarily due to lower revenues and higher tariff costs, partially offset by lower SG&A.

In the quarter ending on Jun 30, 2019, the company shipped 68,757 motorcycles compared with 72,593 in second-quarter 2018.

Harley-Davidson’s retail motorcycle units sold in the United States declined 8% to 42,762. International units sold fell 8.9% to 29,084 motorcycles from 31,938 in the prior-year quarter. During the reported quarter, the company witnessed sales decline across all the markets. Sales in the Middle East and Africa (EMEA), the Asia Pacific, Latin America, and Canada declined 12.5%, 0.6%, 2.1% and 13.9%, respectively.

Harley-Davidson’s worldwide retail motorcycle units sold declined 8.4% to 71,846 from 78,428 in the year-ago quarter.

Revenues in the Parts & Accessories segment fell 4.2% to $221.3 million. Moreover, the metric for General Merchandise — including Motor Clothes apparel and accessories — fell 5.8% to $64.6 million.

Harley-Davidson Financial Services

Revenues for Harley-Davidson Financial Services (“HDFS”) amounted to $198.6 million compared with $188.1 million in the prior-year quarter. Operating income declined 6.2% to $75.5 million from $80.5 million in the year-ago quarter.

Financial Position

Harley-Davidson had cash and cash equivalents of $924.6 million as of Jun 30 compared with $978.7 million as of Jul 1, 2018. Net long-term debt declined to $4.65 billion from $4.86 billion as of Jul 1, 2018.

At the end of the first half of 2019, the company’s net operating cash inflow was $496.2 million compared with $735.9 million in the first half of 2018. Capital expenditure was $83.2 million compared with $69.2 million in the prior-year period.

Looking Forward

For 2019, Harley-Davidson reiterated full-year motorcycle shipments projection in the range of 212,000-217,000 motorcycles. For third-quarter 2019, it expects motorcycle shipments to be approximately 43,000 to 48,000.

Motorcycles segment operating margin, as a percentage of revenues, is expected in the band of 6-7% for the full year.

Zacks Rank & Stocks to Consider

Harley-Davidson currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and AutoZone, Inc AZO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Copart has an expected long-term growth rate of 20%. In the past six months, shares of the company have surged 58%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have rallied 42.6%.

AutoZone has an expected long-term growth rate of 12.2%. In the past six months, shares of the company have risen 44.2%.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.