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Why Harley-Davidson (HOG) Stock Is Plunging Today

NEW YORK (TheStreet) -- Shares of Harley-Davidson Inc. (HOG - Get Report) are down -5.04% to $63.70 after the motorcycle company lowered its full-year forecast for motorcycle shipments today, based on weaker-than-expected U.S. retail sales and a delay in getting its newest bike into dealer showrooms, Reuters reports.

The new outlook came as the company reported higher than expected second-quarter earnings.

Quarterly profit increased to $354.2 million, or $1.62 a share, from $271.7 million, or $1.21 a share, a year earlier. Analysts on average had expected $1.46 a share, according to Thomson Reuters I/B/E/S.



TheStreet Ratings team rates HARLEY-DAVIDSON INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate HARLEY-DAVIDSON INC (HOG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HARLEY-DAVIDSON INC has improved earnings per share by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HARLEY-DAVIDSON INC increased its bottom line by earning $3.27 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($3.94 versus $3.27).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Automobiles industry average. The net income increased by 18.6% when compared to the same quarter one year prior, going from $224.13 million to $265.92 million.
  • HOG's revenue growth trails the industry average of 22.2%. Since the same quarter one year prior, revenues slightly increased by 9.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 287.65% to $203.59 million when compared to the same quarter last year. In addition, HARLEY-DAVIDSON INC has also vastly surpassed the industry average cash flow growth rate of 42.27%.
  • 45.76% is the gross profit margin for HARLEY-DAVIDSON INC which we consider to be strong. Regardless of HOG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HOG's net profit margin of 15.40% significantly outperformed against the industry.
  • You can view the full analysis from the report here: HOG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet's Whalen MacHale has details on Harley's Q2 results:

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