Harley-Davidson, Inc. HOG reported adjusted earnings of 54 cents per share in fourth-quarter fiscal 2017, beating the Zacks Consensus Estimate of 46 cents. Earnings in the year-ago quarter were 27 cents.
Net income decreased to $8.3 million from $47.2 million, registered a year ago.
Motorcycle and related products revenues rose to $1.05 billion in the reported quarter compared with $933 million in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $1.01 billion. The company also logged consolidated revenues of $1.23 billion, improving from the year-earlier period’s tally of $1.11 billion.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Operating income increased to $101.5 million from $69.4 million in the year-ago period.
Fiscal 2017 Results
Harley-Davidson reported earnings of $3.02 per share in fiscal 2017, down from $3.83 earned in fiscal 2016. Also, earnings per share missed the Zacks Consensus Estimate of $3.41.
Net income fell to $521.8 million from $692.2 million recorded a year ago. Consolidated revenues declined to $5.65 billion from $6 billion in fiscal 2016. However, the figure also surpassed the Zacks Consensus Estimate of $4.88 billion.
Motorcycles and Related Products
Operating income from Motorcycles and Related Products rose to $37.8 million from $9.3 million, recorded a year ago.
During the quarter under review, revenues from Harley-Davidson motorcycles dropped 17% to $801.7 million. The company shipped 47,198 motorcycles to dealers and distributors worldwide during the fiscal fourth quarter under review compared with 42,414 shipments in fourth-quarter 2016.
Harley-Davidson’s worldwide retail sales of motorcycles fell 9.6% to 42,142 units from 46,610 motorcycles in the year-ago quarter.
Harley-Davidson’s retail motorcycle sales in the United States declined 11.1% to 23,195 units. International sales decreased 7.7% to 18,947 motorcycles from 20,533 in the prior-year quarter.
All the regions posted a sales decline from the previous-year quarter. While Canada witnessed a 4.9% gain, Latin America’s sales reduced 7.1%. Middle East and Africa (EMEA) region’s sales fell 5.5% while the Asia-Pacific region witnessed an 11.8% drop.
Revenues from Parts and Accessories slid 0.8% to $168 million. Similarly, the metric from General Merchandise — including MotorClothes apparel and accessories — dipped 2.3% to $71.2 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment rose 2.4% to $182 million in fourth-quarter 2017. Operating income improved 5.9% to $63.7 million from the year-ago figure of $60.1 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $687.5 million as of Dec 31, 2017 compared with $760 million as of Dec 31, 2016. Long-term debt was lowered to $4.6 billion from $4.7 billion as of Dec 31, 2016.
For the fiscal year ending Dec 31, 2017, Harley-Davidson’s operating cash inflow declined to $1 billion from $1.2 billion a year-ago. Capital expenditures decreased to $206 million from $256 million in the preceding-year period.
Looking Forward
For fiscal 2018, Harley-Davidson expects full-year motorcycle shipments to be roughly within the range of 231,000-236,000 units, down from 241,498 units in fiscal 2017. Also, for the first quarter of fiscal 2018, the company expects motorcycle shipments to be approximately 60,000-65,000 units.
Moreover, for fiscal 2018, the company anticipates capital expenditures within $250-$270 million band in comparison to $206 million in fiscal 2017. Further, the operating margin is estimated at nearly 9.5-10.5% as compared to 12.5% in fiscal 2017.
Price Performance
In the last three months, shares of Harley-Davidson have outperformed the industry it belongs to. The stock has rallied 16.8% compared with the industry’s 2.2% gain.
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Zacks Rank & Key Picks
Harley-Davidson carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Oshkosh Corporation OSK, Daimler A.G. DDAIF and Allison Transmission Holding, Inc. ALSN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oshkosh has an expected long-term growth rate of 14.5%. Shares of the company have surged 34.6% in the last six months.
Daimler has an expected long-term growth rate of 7.1%. In the last six months, shares of the company have climbed 32.2%.
Allison Transmission has an expected long-term growth rate of 2.8%. The stock has gained 6.2% in the last three months.
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