Why Harley-Davidson (HOG) Stock Is Declining Today

NEW YORK (TheStreet) -- Shares of Harley-Davidson Inc (HOG) are declining 1.68% to $59.52 after the company recalled approximately 126,000 motorcycles over a problem with the clutch that could cause crashes.

The company's recall is for all of its model year 2014 Touring bikes after 19 low-speed crashes as a result of the clutch issue.

Additionally, Harley-Davidson is recalling 1,400 street bikes for a possible fuel tank leak.

Separately, 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 revenue growth, notable return on equity, expanding profit margins, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HARLEY-DAVIDSON INC has improved earnings per share by 33.9% 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 ($3.79 versus $3.27).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 30.3% when compared to the same quarter one year prior, rising from $271.74 million to $354.15 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market, HARLEY-DAVIDSON INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 46.70% is the gross profit margin for HARLEY-DAVIDSON INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.70% is above that of the industry average.
  • You can view the full analysis from the report here: HOG Ratings Report

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