Harley-Davidson jumps 23% on strong Q3 results

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Harley-Davidson

One of the best-performing stocks on Tuesday happened to be the well-known motorcycle manufacturer Harley-Davidson (NYSE: HOG). While demand for cars has largely declined due to the coronavirus, with a notable exception being made for Tesla, Harley-Davidson has remained quite resilient in the face of reduced demand for recreational vehicles. After reporting its third-quarter financial results, shares of Harley shot up by over 20%.

Despite the fact that sales are down around 8% this quarter in comparison to a year ago, Harley reported a substantial 39% increase in overall profitability. Net income is up to $120.2 million, in comparison to the $86.6 million reported a year ago. Total revenue is at $964 million, whereas Harley saw its revenue figures come in closer to $1.1 billion during last year’s third quarter.

These results are the fruits of a long-planned cost-cutting plan that aimed to improve profitability and make the motorcycle manufacturer much more efficient overall. This includes eliminating some of the slow-selling models from its lineup, cutting down on inventory, as well as scaling back in overseas markets.

We have started on our journey to become a high-performance company where business structure, leadership principles and our culture are all aligned. The platform we are creating will support the work ahead as we continue to develop and execute our new 5-year strategic plan,” said CEO Jochen Zeitz in a statement on Tuesday. “We don’t want to grow for the sake of growing. We want to grow profitably.”

The company also said that it would be leaving 39 different overseas markets that have shown little sales overall. In comparison, it would be focusing on 17 overseas distributors to sell its products outside North America and Europe. Additionally, Harley-Davidson has also laid off around 10% of its employees in an effort to trim its costs. It also plans to reduce the number of models in its lineup by around one-third while keeping its cash position around $3.6 billion, a pretty impressive figure considering last year Harley only had around $860 million in cash and cash equivalents.

While management refused to provide an updated fiscal outlook for 2020, given the uncertainty surrounding COVID-19, most Wall Street analysts now have lofty expectations for the motorcycle manufacturer following this set of impressive results.

Shares of Harley-Davidson are up as much as 23% over the course of the day, making it one of the top-performing stocks on the market that isn’t a micro-cap or a penny stock. In comparison, the markets were relatively muted on Tuesday, still slipping a little on coronavirus worries, but nowhere to the same extent as they did on Monday.

 

Harley-Davidson Company Profile

Harley-Davidson is a global leading manufacturer of heavyweight motorcycles, merchandise, parts, and accessories. It sells custom, cruiser, and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear, and apparel, as well as merchandise. Harley-Davidson Financial Services provides wholesale financing to dealers and retail financing and insurance brokerage services to customers. Harley has historically captured about half of all heavyweight domestic retail motorcycle registrations. We expect the firm will expand into middleweight markets in 2021. – Warrior Trading News

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