Harley-Davidson (HOG) Q2 Earnings: Will it Disappoint?

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Harley-Davidson, Inc.HOG is set to report second-quarter 2017 results on Jul 18, before the market opens. Last quarter, the company had delivered an earnings beat of 6.06%.

Let us see how things are shaping up for this announcement.

Harley-Davidson, Inc. Price and Consensus

Harley-Davidson, Inc. Price and Consensus | Harley-Davidson, Inc. Quote

Factors Influencing This Quarter

Harley-Davidson continues to expect stiff competition, which may hurt its retail sales as competitors rely on discounts and product introductions to boost the same. The weak demand in Asia Pacific is expected to contunue through the second half of 2017. Also, retail inventory in the U.S. is expected to lie low in the second quarter.

Harley-Davidson anticipates motorcycle shipments in 2017 to be either at the same level or slightly lower than 2016. In second-quarter 2017, the company hopes to ship 80,000 to 85,000 motorcycles, compared with 88,160 motorcycles shipped in the year-ago period.

The company’s Financial Services segment is also expected to show a downtrend in operating income mainly due to higher borrowing costs and credit losses. In the previous quarter, the segment’s operating income declined 6.6% year over year.

Harley-Davidson will be paying $ 15 million as settlement charges to the Environmental Protection Agency (EPA) due to its “super tuners” releasing harmful emissions despite bolstering power. Of the total amount, $ 3 million will be spent to replace conventional woodstoves with cleaner-burning in the faulty models to mitigate air pollution. Per the deal, it will buy back all the devices and discontinue future sales of the product. These actions will add to its expenses.

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

Zacks ESP : The Earnings ESP for Harley-Davidson is -2.17% as the Most Accurate estimate is $ 1.35 million, while the Zacks Consensus Estimate is pegged at $ 1.38. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. 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 #4 (Sell). Note that the stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating earnings.

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

Price Performance

Harley-Davidson’s shares have plunged 13.4% in the last three months, underperforming the Zacks categorized Auto Manufacturers-Domestic industry’s 4.5% rise.

Stocks to Consider

Here are some companies in the Auto industry you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

PACCAR Inc. PCAR has an earnings ESP of +2.04% and carries a Zacks Rank #2. The company will release its second-quarter 2017 results on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here .

Horizon Global Corporation HZN has an earnings ESP of +2.99% and carries a Zacks Rank #2. The company is expected to release its second-quarter 2017 results on Aug 14.

Tenneco Inc. TEN has an earnings ESP of +3.87% and carries a Zacks Rank #3. The company will release its second-quarter 2017 results on Jul 28.

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Harley-Davidson, Inc. (HOG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Craig Ballantyne

I love anything to do with Harley Davidson and have two beautiful children and a beautiful partner. In my spare time i like building websites and love anything to do with the internet.

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