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Things to Note Ahead of Harley-Davidson (HOG) Q1 Earnings

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·4 min read
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Harley-Davidson Inc. HOG is slated to release first-quarter 2022 results on Apr 27, before the bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.52 a share and $1.34 billion, respectively.

The Zacks Consensus Estimate for Harley-Davidson’s first-quarter loss per share has been unchanged over the past 60 days. The bottom-line projection implies a year-over-year decline of 9.5%. Nonetheless, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year uptick of 8.4%.

This iconic motorcycle manufacturer posted fourth-quarter 2021 earnings against the consensus estimate of a loss per share. Higher-than-anticipated revenues from both Motorcycles & Related Products and Financial Services segments resulted in this outperformance.

Harley-Davidson surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being 78%. This is depicted in the graph below:

HarleyDavidson, Inc. Price and EPS Surprise

HarleyDavidson, Inc. Price and EPS Surprise
HarleyDavidson, Inc. Price and EPS Surprise

HarleyDavidson, Inc. price-eps-surprise | HarleyDavidson, Inc. Quote

While investors are keeping their fingers crossed for HOG to retain its earnings beat streak, our model does not predict the same. Let’s look at the factors shaping the company’s upcoming results.

Factors at Play

Harley-Davidson has been battling severe supply-chain disruptions amid the global microchip shortage, which is likely to have dented the iconic-motorcycle maker’s production and shipments in the to-be-reported quarter. Evidently, the Zacks Consensus Estimate for worldwide retail sales is pegged at 44,192 units, implying a decline from 44,234 units sold in first-quarter 2021.

Nonetheless, the Zacks Consensus Estimate for revenues from the Motorcycles and Related Products segment — which constitutes bulk of the firm’s overall revenues — is pegged at $1,332 million for the March-end quarter, suggesting an increase from the $1,232 million reported in the year-ago quarter. Also, the consensus mark for operating income from the segment is pegged at $241 million, suggesting growth from the profit of $228 million recorded in the corresponding quarter of 2021.

On the flip side, Harley-Davidson issued a bleak outlook for the Financial Services segment in the last earnings call. The company expects 2022 operating income from the unit to decline 20-25% year over year. The muted projection raises a concern for the upcoming results. The Zacks Consensus Estimate for operating income from Financial Services is pegged at $78 million, depicting a drop from $119 million generated in the comparable year-ago period.

Rising commodity and logistical costs along with elevated capital expenditure associated with product innovation and digital advancement are also expected to have played spoilsports.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Harley-Davidson this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Harley-Davidson has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is on par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Harley-Davidson currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

While an earnings beat looks uncertain for HOG, here are a few stocks in the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Allison Transmission ALSN has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.

The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.

Cummins, Inc. CMI has an Earnings ESP of +1.68% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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