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Category: Stock Market and Harley-Davidson
Date: 28 January 2020 Stock Price: $33.33 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Harley-Davidson, the world famous bike builder, who has been struggling in recent years, and their stock price performance shows it
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About Harley-Davidson
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson has fulfilled dreams of personal freedom by leading the innovation of two-wheeled mobility. The company offers an expanding range of leading-edge, distinctive and customizable motorcycles and brings the brand to life through Harley-Davidson riding experiences and exceptional motorcycle parts, accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get Harley-Davidson riders on the road
Harley-Davidson manufactures and sell custom, cruiser and touring motorcycles that feature leading-edge styling, innovative design, distinctive sound, and superior quality with the ability to personalize. We also provide:
Harley-Davidson Financial Services offers a complete line of financing options and insurance products and services to help get and keep customers on the road. HDFS offers to dealers and customers:
Harley-Davidson manufactures and sell custom, cruiser and touring motorcycles that feature leading-edge styling, innovative design, distinctive sound, and superior quality with the ability to personalize. We also provide:
- Riding experiences and events
- Accessories to customize our motorcycles
- Riding apparel and gear for riders and passengers
- Casual apparel and accessories for riders, passengers and enthusiasts
- Motorcycle service parts
Harley-Davidson Financial Services offers a complete line of financing options and insurance products and services to help get and keep customers on the road. HDFS offers to dealers and customers:
- Wholesale and retail financing
- Insurance
- Extended service and other protection plans
- Credit card programs
Overview of Harley-Davidsons' 4th quarter 2019 earnings report
The numbers we are interested in (for the quarter):
In the latest quarter motorcycles made up 76.23% of Harley-Davidson's revenue, parts and accessories made up 14.78% and general merchandise 6.5%.
- Motorcycles and Related Products revenue: $874.095 million (down from $955.633 million from the same quarter of the previous year)
- Motorcycles and Related Products revenue decreased by -8.5% over the last 12 months
- Motorcycles and Related Products revenue decreased by -8.5% over the last 12 months
- Selling,admin and engineering expenses: $266.428 million (down from $303.763 million for the same quarter of the previous year)
- Selling,admin and engineering expenses decreased by -12.2% over the last 12 months
- Selling,admin and engineering expenses decreased by -12.2% over the last 12 months
- Net income: $13.496 million (down from $495 thousand for the same quarter of the previous year)
- Diluted earnings per share: $0.09 (up from $0.00 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 159.913 million (down from 163.014 million for the same quarter of the previous year)
- Dividend declared for the quarter: $0.375 (up from $0.370 for the same quarter of the previous year)
- Cash and cash equivalents: $833.863 million
- Cash and cash equivalents per share: $5.21
- Cash and cash equivalents makes up 15.64% of Harley-Davidson's market capital
- Cash and cash equivalents makes up 7.9% of Harley-Davidson's total assets
- Accounts receivable: $259.334 million
- Accounts receivable makes up 2.46% of the Harley-Davidson's total assets.
- Finances receivable: $2.272 billion (up from $2.214 billion for the same quarter of the previous year)
- Finances receivable makes up 21.57% of Harley-Davidson's total assets
- Stockholders equity: $1.803 billion
- Stockholders equity per share: $11.27
- Harley-Davidson is trading at 2.95 times its stockholders equity per share
- Cash generated from operations (for fiscal year): $868.272 million
- Cash generated from operations per share (for fiscal year): $5.42
In the latest quarter motorcycles made up 76.23% of Harley-Davidson's revenue, parts and accessories made up 14.78% and general merchandise 6.5%.
Harley-Davidson's management commentary on their 4th quarter 2019 earnings
MILWAUKEE, Jan. 28, 2020 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE:HOG) today reported fourth quarter and full-year 2019 results. Fourth quarter earnings per share (EPS) was up year-over-year and overall performance in the quarter and full-year was in line with company expectations. The company advanced its More Roads to Harley-Davidson plan and is on-track to realize its expectation of significant growth in 2021.
"Our performance in Q4 and the full year was in line with our expectations and indicative of increased business stability driven by the tremendous efforts of our employees and dealers," said Matt Levatich, president and chief executive officer of Harley-Davidson. "In 2019, we took important steps toward returning to significant growth in 2021 – including launching LiveWire, our first electric motorcycle, optimizing our global dealer network and expanding our international footprint," said Levatich.
"Our performance in Q4 and the full year was in line with our expectations and indicative of increased business stability driven by the tremendous efforts of our employees and dealers," said Matt Levatich, president and chief executive officer of Harley-Davidson. "In 2019, we took important steps toward returning to significant growth in 2021 – including launching LiveWire, our first electric motorcycle, optimizing our global dealer network and expanding our international footprint," said Levatich.
"We see 2020 as the pivotal year in the transformation of Harley-Davidson. This year we will broaden the reach of our brand and build more committed riders as we enter new and growing segments in motorcycling and eBicycles; more and easier access to two-wheeled freedom on a Harley is well underway," said Levatich.
2020 Outlook
For the full-year 2020, the company expects the following:
2020 Outlook
For the full-year 2020, the company expects the following:
- Motorcycles segment revenue of approximately $4.53 to $4.66 billion. In the first quarter, the company expects Motorcycles segment revenue of approximately 1.09 to 1.17 billion
- Motorcycles segment operating margin as a percent of revenue of approximately 7 to 8 percent
- Financial Services segment operating income approximately flat year-over-year
- Effective tax rate of approximately 24 to 25 percent
- Capital expenditures of approximately $215 million to $235 million
Harley-Davidson (NYSE: HOG) stock price history
The image below shows the stock price history of Harley-Davidson. It's been a pretty depressing time for Harley-Davidson stockholders and fans of the bike building group. 5 years ago the stock was trading at around $61.70 and its currently trading at $33.53. That's a -45.9% loss for Harley-Davidson stockholders over the last 5 years. It is also trading at a lot closer to its 52 week low of $30.17 than it its to its 52 week high of $41.40 which is a clear indication that the short term sentiment and momentum towards Hrley-Davidson stock is largely negative.
Recent coverage of Harley-Davidson
The extract below touches on the latest regarding Harley-Davidson, as obtained from TheStreet.com
Shares of iconic motorcycle maker Harley-Davidson (HOG) - Get Report revved lower on Tuesday after the company posted earnings that missed analysts’ forecasts due to the impact of China and European Union tariffs that took a bite out of U.S. sales. The Milwaukee-based company said it earned $13.5 million, or 20 cents an adjusted share, in the fourth quarter, vs. $500,000, or 17 cents, in the comparable year-ago period. Analysts polled by FactSet had been expecting earnings of 24 cents a share.
Revenue came in at $1.07 billion, above analysts’ estimates of $922.4 million though below the $1.15 billion in sales it recorded in the fourth quarter of 2018. U.S. retail sales continued to fall in the fourth quarter, though the pace was more tempered, Harley-Davidson said. U.S. sales also dropped on a full-year basis, though the rate of decline was the lowest since 2016.
Read the full article here.
Shares of iconic motorcycle maker Harley-Davidson (HOG) - Get Report revved lower on Tuesday after the company posted earnings that missed analysts’ forecasts due to the impact of China and European Union tariffs that took a bite out of U.S. sales. The Milwaukee-based company said it earned $13.5 million, or 20 cents an adjusted share, in the fourth quarter, vs. $500,000, or 17 cents, in the comparable year-ago period. Analysts polled by FactSet had been expecting earnings of 24 cents a share.
Revenue came in at $1.07 billion, above analysts’ estimates of $922.4 million though below the $1.15 billion in sales it recorded in the fourth quarter of 2018. U.S. retail sales continued to fall in the fourth quarter, though the pace was more tempered, Harley-Davidson said. U.S. sales also dropped on a full-year basis, though the rate of decline was the lowest since 2016.
Read the full article here.
Harley-Davidson (NYSE: HOG) latest stock valuation
So based on Harley-Davidson's latest earnings report and their outlook provided what do we value Harley-Davidson stock at? Considering their latest earnings report and the outlook provided our valuation model provides a target price (full value price) of $44.80 a Harley-Davidson stock (down considerably from our 2nd quarter earnings report valuation of Harley-Davidson. A reflection of their worsening fiscal results over the rest of their 2019 fiscal year).
Even so we believe the stock of Harley-Davidson is undervalued at its current price of $33.34 and it offers long term fundamental and value investors a great opportunity to buy into one of the most famous brands in the world. We usually recommend that fundamental or long term value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $44.80. We therefore believe a good entry point into the stock of Harley-Davidson would be at $40.30 or below.
Since the stock of Harley-Davidson is trading at well below our recommended entry point we rate their stock as a buy, but investors will have to be patient with this one as tariff-trade war is still hurting their numbers.
Even so we believe the stock of Harley-Davidson is undervalued at its current price of $33.34 and it offers long term fundamental and value investors a great opportunity to buy into one of the most famous brands in the world. We usually recommend that fundamental or long term value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $44.80. We therefore believe a good entry point into the stock of Harley-Davidson would be at $40.30 or below.
Since the stock of Harley-Davidson is trading at well below our recommended entry point we rate their stock as a buy, but investors will have to be patient with this one as tariff-trade war is still hurting their numbers.
Next earnings release of Harley-Davidson
It is expected that Harley-Davidson will release their 1st quarter 2020 earnings report in late April 2020