Harley-Davidson Inc. Stock Down 4% Since Earnings Release

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FAAKER SEE, AUSTRIA - SEPTEMBER 10: Custom motorcycles are shown at European Bike Week on September 10, 2011 in Faaker See, Austria. The event is billed as the largest European motorcycle event.

Harley-Davidson Inc. (HOG) stock is own 4.06% since the company released their most recent earnings report on October 17. The company’s stock is down primarily on soft market sales, and its earnings pointed to falling sales in the third quarter.

The company’s reported revenue was down from $1.09 billion a year prior to $962.14 million in Q3 2017. Wall Street pegged the company’s revenue to fall to $953.26 million. The earnings beat provided the stock with a temporary rise of 4.17% until October 23 when the stock price started to fall. Market correction has pushed the stock to around $45 – $46 a share.

Harley-Davidson Inc. made note in their earnings report that their sales were impacted due to hurricanes in the southeast during the third-quarter. Hurricane Harvey battered much of the southern portion of the state, impacting sales. The company was under headwinds in Australia, Mexico and Japan where motorcycle sales have fallen.

Lower motorcycle shipments caused the company’s motorcycle and related products segment to drop 14% on the quarter.

Earnings per share (EPS) helped boost the company’s stock. Harley Davidson posted an EPS of $0.40, beating estimates of $0.39 EPS. The company’s earnings per share are significantly down from the same period a year prior when they posted an EPS of $0.64.

The company expects their full year sales to fall within the 241,000 – 246,000 units. Compared to a year prior, the sales will fall between 6% and 8%, according to the company. The news comes as more motorcycle riders are reluctant to purchase new motorcycles. Reports of motorcycle accidents rising in Kentucky hit the news in June, while several states have reported higher deadly motorcycle crashes in 2017.

Profits for Harley-Davidson also show a company in trouble of remaining profitable. The company’s third-quarter fiscal profit fell to $68.2 million, down 40% on the year. Millennial buyers are the company’s most troubling segment, with many millennials reluctant to buy motorcycles.

Worldwide motorcycle sales fell 7% on the quarter, with sales in the United States being the primary factor behind the company’s sales slump.

Baby boomers, a former driver of motorcycle sales, are abandoning their motorcycles as millennials remain reluctant to purchase them in the first place. International sales, a former bright spot for the company, also continue to fall, which raises concerns for Harley Davidson’s future earnings.

Harley expanded into the Asian markets in May with an announcement that they will operate an assembly plant in Thailand. The plan is to better serve the company’s Asian consumers and to eliminate the near 60% tariff on U.S. manufactured motorcycles in Thailand.

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