Harley-Davidson (HOG) may have been around for over 110 years, but it has clearly kept up with the times. Harley-Davidson recently introduced “Livewire,” a new electric motorcycle prototype that has the classic rumble of a Harley with a more futuristic look.
Is the Livewire Project, plus yesterday’s Q3 earnings announcement, enough to earn Harley-Davidson a buy recommendation?
Company Profile
Founded in 1903, the Harley-Davidson name has been synonymous with the best heavyweight motorcycles that money can buy. As one of the few motorcycle companies to survive the Great Depression, Harley-Davidson managed to create its own culture, including a fiercely loyal fan base mostly stemming from American males in their mid-30s.
The Harley-Davidson brand has become so popular that the company supplements its motorcycle sales by licensing its logo to apparel makers worldwide. This quarter, Harley-Davidson’s revenue from general merchandise, which includes MotorClothes rose by 4.8% or $69 million. .
Earnings Rundown
During the third quarter, Harley-Davidson reported net income $150.1 million or 69 cents per share, which is an 8% decrease from last year, but still beat analysts’ estimates of 60 cents per share. Compared to Q3 2013, revenue fell 3% to $1.3 billion.
Consolidated revenue was up 6.8%, and diluted earnings-per-share increased 20.1% to $3.52. Compared to the previous year, Harley-Davidson worldwide sales were up 3.7% as it sold 73,217 new motorcycles in the third quarter. Overall, Harley-Davidson reported solid third-quarter earnings, so shares rallied on Tuesday.
Current Ratings
Over the past four months HOG has fallen from a “B-rated buy” to a “D-rated sell.” This downgrade can be attributed to weak buying pressure, which needs serious improvement. HOG receives a “F” for its Quantitative Grade.
On the fundamentals side, Harley-Davidson performs fairly well. Harley-Davidson earns strong scores on: sales growth (B), operating margin growth (B), earnings growth (B), earnings momentum (B), earnings surprises (B), cash flow (B), and return on equity (A). However, when it comes to analyst earnings revision (D) there’s plenty of work to do. HOG receives a “B” for its Fundamental Grade.
As of this posting, Oct. 22, I consider Harley-Davidson a “D-rated sell.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
