Harley-Davidson (NYSE:HOG) is slated to report its Q2 2022 results on July 28. We estimate that Harley’s revenue will come in at about $1.62 billion for the quarter, ahead of consensus estimates and up by about 6% versus last year. We project that earnings will stand at close to $1.20 per share, marginally ahead of consensus estimates of $1.18. So what are some of the trends that are likely to drive Harley’s results?
Over Q1, Harley’s motorcycle shipments remained roughly flat year-over-year at 54,800 units, as the company’s production was impacted by the semiconductor shortage that plagued the broader auto sector. The parts supply issue continued into Q2 as well, with the company suspending all vehicle assembly and shipment for a two-week period around May. Moreover, there have been macroeconomic concerns, with inflation surging and consumer confidence in the U.S. declining. However, we think that Harley’s revenues should benefit from stronger pricing. Harley’s operating margins will also be a key factor to watch. While the ongoing supply chain issues and rising inflation have impacted manufacturers across the board, Harley should benefit from its increasing focus on premium motorcycles and growth in its margin accretive parts and accessories and apparel businesses. Overall, Harley previously estimated revenue growth of 5% to 10% for 2022, with operating margins projected to come in at between 11% to 12%.
While Harley stock declined by roughly 14% year to date, we think the stock is likely to trade a bit higher following its Q2 earnings. Overall, we believe Harley stock looks compelling at current levels of about $32 per share, considering that it trades at under 8x projected 2022 earnings and under 7x projected 2023 earnings. Moreover, although the company saw flat to negative growth over the last several years, we expect Harley to grow revenue by over 8% in 2022 and by around 7% in 2023. We value HOG stock at about $52 per share, considerably ahead of the current market price. See our analysis on Harley- Davidson Valuation: Expensive or Cheap for more details. Also, check out our analysis of Harley-Davidson Revenue for more information on the company’s key revenue streams and how they are trending.
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