Tuesday was generally a pretty good day for the markets, with traders reacting positively to this most recent batch of Q4 results. For the most part, earnings were well received, especially since big tech stocks have largely reported their earnings now. One of Tuesday’s top performers happened with be Harley-Davidson (NYSE: HOG), whose shares jumped after reporting an unexpected profit.
Just like with most car companies, Harley-Davidson has also been investing heavily into the shift into electric vehicles. While EVs represent a massive market in the long term, most analysts are expecting more losses from companies transitioning into EV manufacturing in the short-to-mid term as they ramp up production in the coming years.
That’s one reason why Wall Street generally had bearish expectations for Harley-Davidson. The consensus estimate was that the motorcycle manufacturer would report a $669 million net loss. That would have been roughly in line with last year’s figures, where the company reported a $531 million net loss.
To their surprise, however, Harley reported a net income of $21.6 million, while Q4 revenues came in at $1.01 billion, above last year’s $725 million. Going forward, the company expects revenue from motorcycle sales to increase by another 5-10% going into 2022. Operating margins also came in at 9%, an increase of over 2.7% compared to the previous year. However, that is slightly down compared to 2020s operating margins.
“Harley-Davidson delivered a strong finish to the year, in which we have seen proof points on all elements of our Hardwire Strategy,” said Harley’s CEO and President, Jochen Zeitz. “We are fully committed to achieving our long-term Hardwire Strategy, as the most desirable motorcycle brand and company in the world.”
Back in December, Harley-Davidson announced it merged with a Taiwanese-based manufacturer called KYMCO. The idea is that this merger would help accelerate Harley’s existing EV plans, including the launch of its own electric bicycle. According to insider reports, the new electric bike could arrive by 2023, acting more of a middleweight bike than the usual heavyweights that Harley offers.
Following the earnings news, traders quickly jumped on Harley’s stock, driving up share prices by 15.5%. However, compared to a year ago, the company hasn’t really done that well, with stocks prices up just 14.7%. Despite the general excitement surrounding electric vehicles and the general lack of competitors in the EV-bike submarket, most analysts remain skeptical about Harley’s chances for massive success.
This includes Stifel’s Drew Crum, who remains staunchly neutral about the company’s future prospects. The majority of Wall Street analysts are neutral as well. Around nine have a “hold” rating, while five are bullish.
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
