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What's in Store for Harley-Davidson (HOG) in Q1 Earnings?

Zacks Equity Research

Harley-Davidson, Inc. HOG is set to report first-quarter 2019 results on Apr 23, before the opening bell. In the last reported quarter, it delivered earnings miss of 100%. The long-term growth rate of the Milwaukee, WI-based motorcycle manufacturer is 8%.

In the past three months, shares of Harley-Davidson have outperformed the industry it belongs to. The stock gained 9.6% compared with the industry’s 1% growth.

Let’s see, how things shaped up for the upcoming announcement.

Harley-Davidson, Inc. Price and EPS Surprise


Harley-Davidson, Inc. Price and EPS Surprise | Harley-Davidson, Inc. Quote

Factors Influencing This Quarter

Harley-Davidson initiated an ambitious plan to renew the product line and attract new riders. For the long term, the company is undertaking several investments. By 2027, it aims to introduce 100 motorcycles. In sync with the strategy to expand product portfolio, Harley-Davidson acquired StaCyc Inc. in March 2019. Inclusion of the California-based company in the portfolio will aid the United States-based motorcycle manufacturer to enter the kids’ electric bike market, thereby, expanding the riders’ age group.

Apart from investing in products, Harley-Davidson is also working on marketing and sales support. Last year, the company opened 56 dealerships. It aims to add 150-200 dealerships internationally by 2027. Further, the company is improving online presence by offering merchandised products through Amazon.

However, customers’ shifting preference from heavy-weight motorcycles to smaller and fuel-efficient motorcycles is likely to hurt the company’s sales. Further, unfavorable mix and foreign currency translation will adversely affect first-quarter 2019 results. For the soon-to-be-reported quarter, it expects shipments of approximately 53,000-58,000 units, marking a decline of approximately 9-17%.

For first-quarter 2019, the Zacks Consensus Estimate for total revenues of Harley-Davidson’s Financial Services, and Motorcycles and Related Products segments are pegged at $183 million and $1.2 billion, respectively. The consensus estimate for the quarter’s total motorcycle shipment is pegged at 55,222 units.

Earnings Whispers

Our proven model does not conclusively predict that Harley-Davidson is likely to beat on earnings this quarter. This is because, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Harley-Davidson has an Earnings ESP of -2.99% as the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 65 cents and 67 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 3, which increases the predictive power of ESP. However, this combined with a negative Earnings ESP makes a surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:

General Motors Company GM has an Earnings ESP of +5.61% and it is a #3 Ranked player. Its first-quarter 2019 results are slated to release on Apr 30.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins Inc. CMI has an Earnings ESP of +1.88% and it currently carries a Zacks Rank of 3. Its first-quarter 2019 results are scheduled to release on Apr 30.

Peer Release

On Mar 29, CarMax, Inc. KMX announced fourth-quarter fiscal 2019 earnings. In the reported quarter, the company posted net earnings per share of $1.13 while net sales and operating revenues were $4.32 billion. Currently carrying a Zacks Rank of 3, the company’s quarterly figures surpassed the respective Zacks Consensus Estimate.

Zacks' Top 10 Stocks for 2019

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