Shares of Harman International Industries (HAR) reached a new 52-week high of $111.23 on Thursday, March 20, 2014. The bullish run reflects Harman’s impressive second-quarter earnings, strong product pipeline, solid patent portfolio and new business awards.
The closing price of Harman on Mar 20 was $110.90, representing a strong one-year return of about 146.8%. The S&P 500 jumped 20.4% during the same period.
Harman delivered an average positive earnings surprise of 13.6% over the past four quarters. This Zacks Rank #1 (Strong Buy) stock has a market cap of $7.52 billion and a long-term expected earnings growth rate of 24.1%.
Key Growth Catalysts
Harman reported an impressive second quarter of fiscal 2014. Earnings of $1.09 per share comprehensively beat the Zacks Consensus Estimate by 11 cents. Earnings per share jumped 84.7% from the year-ago quarter. Revenues increased 25.8% from the year-ago quarter to $1.33 billion and were ahead of the Zacks Consensus Estimate of $1.25 billion.
Harman continues to win new business awards. In the second quarter, the company’s Infotainment division won customer awards worth $725.0 million from the likes of VW Group, Chang’an, Geely, Yamaha, Suzuki, BMW, Jaguar/Land Rover.
The company launched car audio systems in several vehicles, including a Lexicon system in the Hyundai Genesis and a JBL system in the Toyota (TM) Highlander. Moreover, the recently announced partnerships with Softbank, Sprint Corp. (S), Trikomsel and Brightstar will expand Harman’s market share, going forward.
Furthermore, Harman continues to expand through its partnerships with the likes of Apple (AAPL). We believe that the new restructuring program will significantly improve profitability in the near term. This will provide Harman a competitive edge over the likes of Sony Corp. (SNE) going forward.
Estimate Revision
For the third quarter of 2014, the Zacks Consensus Estimate increased a nickel to 99 cents over the past 60 days.
For fiscal 2014, the earnings estimate jumped 20 cents to $4.22 per share over the past 60 days. For fiscal 2015, the earnings estimate increased 30 cents to $5.38 per share over the same period.
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