Will Harley-Davidson Be Able To Beat Earnings Consensus For 2019?

by Trefis Team
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Harley-Davidson
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Yes, as per Trefis estimations, Harley-Davidson (NYSE: HOG) is expected to post earnings around $2.81 compared to the consensus expectations of $2.70. The company is slated to release its Q4 and full-year 2019 results on January 28, 2020. We believe that Harley-Davidson’s Revenues will be in line and Earnings will beat consensus. We expect Harley to report revenues of $5.34 billion (vs. consensus estimate of $5.35 billion), which would be 6.6% lower than the previous year. Earnings are likely to be around $2.81 (vs. consensus estimate of $2.70), down from $3.21 reported in 2018, due to a combination of lower revenues and a fall in net income margin. We believe that stronger-than-expected earnings for FY 2019 would overshadow negative revenue growth and will likely result in a slight positive movement in Harley-Davidson’s stock price once earnings are announced.  In fact, our forecast indicates that Harley-Davidson’s valuation is $37 a share, which is roughly 3% more than the current price of around $36.

 

A] Revenue expected to be in line with Consensus

  • Total revenues has decreased from $6 billion in 2016 to $5.7 billion in 2018.
  • Trefis estimates Harley’s revenues to decrease further due to global slowdown and saturating US market, by 6.6% to $5.3 billion in 2019.
  • Revenue from both the segments are expected to see a fall in with Motorcycle segment bearing most of the fall.

A separate interactive dashboard for Harley-Davidson provides an in-depth view of Harley-Davidson’s revenue trend and segment-wise revenue performance, along with forecast for 2019.

B] EPS To Be Higher Than Consensus

  • Harley-Davidson’s 2019 earnings per share (EPS) is expected to be $2.81 per Trefis analysis, higher than the consensus estimate of $2.70 per share.
  • In 2019, a fall in revenues as detailed above, coupled with a slower reduction in total expenses, offset by a lower share count, will cause the EPS to fall compared to $3.21 earned in the previous year 2018.
  • As we forecast Harley-Davidson’s Revenues to fall and Expenses to have a slower reduction in 2019 (-6.6% vs -5.5%), this will result in a fall in Harley-Davidson’s Net Income Margin figure from 9.3% in 2018 to 8.2% in 2019.

 

C] Stock Price Estimate In Line With Market Price

  • A trailing P/E multiple of 13.2x looks appropriate for Harley-Davidson’s stock, which is in line with the current implied P/E multiple of 13.2x.
  • As per Trefis, Harley-Davidson’s 2019 revenue will be in line with the market expectations while earnings are expected to be higher. This forecast works out to a fair value of $37 for Harley-Davidson’s stock, which is slightly higher than its current market price of around $36.

Additionally, you can input your estimates for Harley-Davidson’s key metrics in our interactive dashboard for Harley-Davidson’s pre-earnings, and see how that will affect the company’s stock price.

 

 

See all Trefis Price Estimates and Download Trefis Data here

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