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Friday’s Consumer Pops and Drops: ALV, GNTX, WHR, and VFC

PART:
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Part 5
Friday’s Consumer Pops and Drops: ALV, GNTX, WHR, and VFC PART 5 OF 10

Pacific Crest Downgrades Harman International to ‘Sector Weight’

Price movement

Harman International Industries (HAR) has a market cap of $5.6 billion. It fell by 2.9% to close at $79.72 per share on July 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.2%, 6.1%, and -14.6%, respectively, on the same day. HAR is trading 7.1% above its 20-day moving average, 5.6% above its 50-day moving average, and 6.1% below its 200-day moving average.

Pacific Crest Downgrades Harman International to &#8216;Sector Weight&#8217;

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Related ETFs and peers

The Guggenheim Raymond James SB-1 Equity ETF (RYJ) invests 0.71% of its holdings in HAR. The ETF tracks an equal-weighted index of US-listed stocks that analysts expect to achieve a 15% total return and outperform the S&P 500 over the next six to 12 months. The YTD price movement of RYJ was 7.4% on July 22.

The iShares Morningstar Mid-Cap Growth Index ETF (JKH) invests 0.50% of its holdings in HAR. The ETF tracks a market-cap-weighted index of mid-cap companies selected by Morningstar based on their growth characteristics.

The market caps of HAR’s competitors are as follows:

  • Delphi Automotive (DLPH): $18.7 billion
  • Lear (LEA): $8.5 billion

Harman’s rating

Pacific Crest has downgraded Harman International Industries rating to “sector weight” from “overweight.”

Performance of Harman International in fiscal 3Q16

Harman International (HAR) reported fiscal 3Q16 net sales of $1.6 billion, a rise of 11.2% over the net sales of $1.5 billion in fiscal 3Q15. Sales of the Connected Car, Lifestyle Audio, and Connected Services segments rose by 5.1%, 11.6%, and 147.8%, respectively.

Sales of the Professional Solutions segment fell by 4.1% between fiscals 3Q15 and 3Q16. The company reported a net foreign exchange of -$3.6 million in fiscal 3Q16, compared with $3.4 million in fiscal 3Q15.

In fiscal 3Q16, HAR’s net income and EPS (earnings per share) rose to $88.8 million and $1.22, respectively, compared with $70.3 million and $0.99, respectively, in fiscal 3Q15.

Harman’s cash and cash equivalents fell by 44.5%, and its inventories rose by 21.1% between fiscals 4Q15 and 3Q16. Its current ratio rose to 1.7x, and its debt-to-equity ratio fell to 1.3x in fiscal 3Q16, compared with 1.4x and 1.5x, respectively, in fiscal 4Q15.

Projections

Harman International Industries (HAR) has updated its projections for fiscal 2016:

  • revenue of ~$6.8 billion
  • operational EPS of ~$6.20

Reductions in the company’s revenue and EPS are due to the weakness in the Professional Solutions division and supply constraints as a result of the earthquakes in Japan. In the next part of this series, we’ll take a look at Fiat Chrysler Automobiles (FCAU).

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