Harley-Davidson, Inc. HOG is set to report first-quarter 2015 results on Apr 21. In the last quarter, the company had posted a positive earnings surprise of 6.06%. Let us see how things are shaping up for this announcement.
Factors Influencing this Quarter
Harley-Davidson expects shipments to be in the range of 79,000–84,000 motorcycles in first-quarter 2015, compared with 80,682 motorcycles shipped in the year-ago period. The company is expanding its product portfolio to increase its customer base and boost sales.
However, the operating income of Harley-Davidson’s Financial Services segment decreased 1.9% year over year in 2014, primarily due to higher provision for credit losses. The company expects operating income from the segment to decline marginally in 2015 due to higher credit losses and contracting net interest margins. Thus, the segment’s operating income may decline in the first quarter as well.
Earnings Whispers
Our proven model does not conclusively show that Harley-Davidson is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Harley-Davidson is currently pegged at -0.80%. This is because the Most Accurate estimate of $1.24 stands below the Zacks Consensus Estimate of $1.25.
Zacks Rank: Harley-Davidson’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
General Motors Company GM has an Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy). The company will report first-quarter 2015 earnings on Apr 23.
Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +4.62% and a Zacks Rank #1. The company will report first-quarter 2015 earnings on Apr 27.
Meritor, Inc. MTOR has an Earnings ESP of +9.09% and a Zacks Rank #3. It will release second-quarter fiscal 2015 earnings results on Apr 29.
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