Harley-Davidson Earnings: A Mixed Bag for Wall Street

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Harley-Davidson, a renowned motorcycle manufacturer, recently released its second-quarter earnings, falling slightly short of Wall Street’s expectations. However, despite this setback, the company’s stock remains strong.

For Q2 2023, Harley-Davidson reported earnings of $1.22 per share from sales amounting to $1.4 billion. Analysts were anticipating earnings of $1.24 per share and sales of $1.3 billion.

Compared to the first quarter of 2023, where the company earned $2.04 per share from sales totaling $1.6 billion, there was a decline in performance.

Furthermore, the management revised their full-year financial guidance for 2023, projecting a growth in motorcycle division sales between 0% and 3%. They also anticipate an operating profit margin ranging from 13.9% to 14.3%, a slight decrease from the previous forecast in April of sales growth between 4% and 7% and an operating profit margin within 14.1% to 14.6%.

In addition to the financial adjustments, there was also a reduction in the expected number of electric motorcycles from the LiveWire (LVWR) division. The revised estimate now stands at 600 to 1,000 units for 2023, compared to the initial guidance of 750 to 2,000 units.

Although the results appear somewhat weak, Harley-Davidson’s stock has experienced a rise in value, increasing by 0.9% to reach $38 in premarket trading. Conversely, S&P 500 and Dow Jones Industrial Average futures have experienced increases of 0.7% and 0.2% respectively.

One of the reasons behind the stock’s upward movement is that the revised guidance still implies an operating profit of approximately $820 million for 2023. This figure is quite close to Wall Street’s current projection of $830 million. Moreover, Harley-Davidson has relatively low valuations, with shares trading at about 8 times estimated earnings for 2024, while the S&P 500 trades at a higher multiple of around 18 times. This factor contributes to the stock not being negatively impacted despite falling short of expectations.

Additionally, the stock’s performance needs to be viewed in the context of its year-to-date decline of approximately 9%, which lags behind the S&P 500’s impressive gain of 19%. The market sentiment leading up to the quarter was already weak, which could explain the stock’s resilience in the face of disappointment.

In conclusion, while Harley-Davidson’s Q2 earnings may have fallen short of expectations, they also exceeded the worst fears, contributing to the stock’s positive performance.

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