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Yesterday’s Consumer Pops and Drops: RAI, PM, HAR, and CAG

PART:
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Part 10
Yesterday’s Consumer Pops and Drops: RAI, PM, HAR, and CAG PART 10 OF 12

Why Did Harman International Rise ~25% on November 14?

Price movement

Harman International Industries (HAR) has a market cap of $7.8 billion. It rose 25.2% to close at $109.72 per share on November 14, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 30.5%, 37.3%, and 18.6%, respectively, on the same day.

HAR is trading 35.7% above its 20-day moving average, 34.0% above its 50-day moving average, and 38.4% above its 200-day moving average.

Why Did Harman International Rise ~25% on November 14?

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Related ETF and peers

The Guggenheim Raymond James SB-1 Equity ETF (RYJ) invests 0.73% of its holdings in HAR. The ETF tracks an equal-weighted index of US-listed stocks expected by analysts to achieve a 15% total return and outperform S&P 500 over the next six to 12 months. The YTD price movement of RYJ was 13.3% on November 14.

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

  • Delphi Automotive (DLPH) — $18.1 billion
  • Lear Corporation (LEA) — $8.7 billion

Latest news on Harman

In a press release on November 14, 2016, Samsung Electronics and Harman International Industries announced, “Samsung Electronics (005930.KS) (“Samsung”) and Harman International Industries, Incorporated (HAR) (“HARMAN”) today announced that they have entered into a definitive agreement under which Samsung will acquire HARMAN for $112.0 per share in cash, or total equity value of approximately $8.0 billion.

“Upon closing the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung, and is expected to grow to more than $100 billion by 2025.”

After this announcement was released, Harman International rose more than 25% on November 14.

Performance of Harman International in fiscal 1Q17

Harman International (HAR) reported fiscal 1Q17 net sales of ~$1.8 billion, a rise of 7.9% compared to net sales of ~$1.6 billion in fiscal 1Q16. Sales of Connected Car, Lifestyle Audio, and Connected Services rose 5.6%, 19.3%, and 4.4%, respectively, in fiscal 1Q17 compared to fiscal 1Q16. Sales of Professional Solutions fell 2.8% in fiscal 1Q17 compared to fiscal 1Q16.

The company’s gross profit margin and operating margin expanded 90 basis points and 50 basis points, respectively, in fiscal 1Q17 compared to fiscal 1Q16.

HAR’s net income and EPS (earnings per share) rose to $103.1 million and $1.45, respectively, in fiscal 1Q17, compared to $87.1 million and $1.20, respectively, in fiscal 1Q16. It reported adjusted EPS of $1.87 in fiscal 1Q17, a rise of 26.4% compared to fiscal 1Q16.

Harman’s cash and cash equivalents fell 15.0%, and its inventories rose 17.8% in fiscal 1Q17 compared to fiscal 4Q16. Its current ratio and debt-to-equity ratio fell to 1.57x and 1.46x, respectively, in fiscal 1Q17 compared to 1.59x and 1.47x, respectively, in fiscal 4Q16.

Next, we’ll discuss Gildan Activewear (GIL).

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