On Dec 29, 2015, Zacks Investment Research upgraded Harley-Davidson, Inc. HOG to a Zacks Rank #3 (Hold).
Why the Upgrade?
Harley-Davidson reported disappointing third-quarter 2015 results and lowered its full-year guidance, which pulled down the stock 26.79% in a single trading session post the earnings release. The company’s fourth-quarter earnings are also expected to plunge year over year.
However, the scenario for 2016 looks better. Harley-Davidson’s earnings per share are estimated to rise 8.19% year over year in the first quarter of 2016 and 12.69% for the full year.
Moreover, the motorcycle manufacturer has a history of outperforming estimates. It has beaten the Zacks Consensus Estimate in three of the trailing four quarters, with a positive average beat of 0.14%.
Although the core motorcycle business is currently witnessing weakness, the operating income of the Financial Services segment has started improving after declines recorded in 2013 and 2014. It grew 1.8% year over year in the first nine months of 2015. Moreover, the company expects it to increase in the full year.
Further, Harley-Davidson is trying to boost motorcycle sales by widening its product portfolio. The company also plans to grow its international dealer network by 150–200 new dealerships by 2020 to expand its customer base.
Stocks to Consider
Better-ranked automobile stocks include General Motors Company GM, Fox Factory Holding Corp FOXF and O'Reilly Automotive Inc. ORLY. All these stocks carry a Zacks Rank #2 (Buy).
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