Harley-Davidson (HOG) shares continued to tumble this week after the corporate’s quarterly gross sales fell in need of expectations Tuesday. That led to considerations about full-year income outcomes.
The inventory is down about 7% during the last 5 days and down about 1% in Friday buying and selling.
From a technical perspective, Harley-Davidson inventory is perhaps at ranges the place a short-term purchase after current hits. From a long-term elementary perspective, there are two issues buyers ought to watch: engines and the surroundings.
Shipments Hamstring the Inventory
The excellent news got here for Harley on the underside line, the place its first-quarter revenue of $1.05 per share topped Wall Road estimates of $1.02 a share. However that’s the place the great headline information just about ends.
Quarterly income was $1.33 billion. That’s down from $1.58 billion within the year-ago interval and under consensus estimates of $1.35 billion. Maybe most significantly, motorbike shipments fell 14.7% from the identical quarter a yr in the past.
Harley did maintain its 2017 steerage of annual shipments fixed, predicting it to be flat or down barely in contrast with 2016.
On Wednesday, RBC Capital Markets reduce its worth goal on HOG to $57 from $60, citing weak demand, in line with Briefing.com. It lowered its expectations of 2017 shipments to -2% from no change.
Additionally on Wednesday, Wedbush reduce its worth goal to $52 from $55, noting that working by means of the overabundance of mannequin yr (MY) 2016s was “a sluggish and painful course of,” Briefing.com reported.
A day earlier than, Goldman Sachs reaffirmed its Impartial score on the inventory and its worth goal of $54.
So, the inventory is just about buying and selling across the vary Wall Road says is truthful valuation. The inventory is far nearer to its 52-week excessive of somewhat greater than $62 than its 52-week low of greater than $42.
Engines or Setting
The buying and selling vary might simply final till the subsequent earnings report, as there aren’t vital elementary catalysts on the calendar. However long run there are two strikes the corporate is making that buyers ought to take note of.
Are the brand new engines Harley-Davidson is touting as a game-changing innovation able to bringing in converts?
The Milwaukee Eight is a big engine redesign and rider enthusiasm for the efficiency will probably be important for shipments. Whether or not the brand new engine might be sufficient to get present riders to commerce of their very dependable older fashions is the most important query mark.
Over the subsequent 10 years, the corporate plans to launch 100 new bikes and pursue its electrical motorbike venture.
Which brings us to this assertion within the earnings launch.
Develop the enterprise with out rising its environmental influence.
Inexperienced is probably not the colour most related to tough and hard Harley, however it’s clearly a administration precedence.
“Preserving the driving surroundings is essential to us,” the corporate stated in its most up-to-date Sustainability Report. “That’s why we’re creating merchandise that tackle environmental points whereas offering the type of visceral, no-excuses driving expertise our clients anticipate.”
“We all know there's a robust future for our conventional merchandise. An electrical Harley-Davidson motorbike is likely one of the methods we're exploring how you can develop the various household of Harley-Davidson riders whereas serving to protect and renew the liberty to experience in our long run strategy to sustainability.”
Translation? We have now to make sure that millennials additionally purchase Harleys.
How does the environmental message come throughout at a time when the political winds are distinctly laissez-faire on environmental regulation? Perhaps it rubs some conventional Harley riders the fallacious method, however that could possibly be canceled out by the truth that the bikes are made in America.