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Why Analysts Think Harley-Davidson's 3Q Earnings Will Remain Weak

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Part 6
Why Analysts Think Harley-Davidson's 3Q Earnings Will Remain Weak PART 6 OF 8

Key Factors to Watch During HOG’s 3Q17 Earnings Event

Harley’s 3Q17 earnings event

So far in this series, we’ve covered analysts’ estimates for Harley-Davidson’s (HOG) 3Q17 earnings. Analysts’ estimates suggest weakness will continue in the company’s upcoming earnings due to lower profitability and sales-related challenges. Now, let’s explore some key highlights of Harley’s 3Q17 earnings event.

Key Factors to Watch During HOG&#8217;s 3Q17 Earnings Event

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Progress on international agenda

In an investor meeting in February 2017, HOG’s management revealed its plan to expand its international dealer network. With this, the company wants to strengthen its presence in developed markets and maximize its potential in emerging markets. Harley is expected to add 150 to 200 dealers in international markets by 2020. Also, the company intends to improve its touring motorcycle share in international markets. We could see an update on HOG’s international agenda during its 3Q17 earnings event.

Updates about new launches

HOG aims to launch 100 new high impact motorcycles in the next decade. On average, this means about ten new high impact motorcycles every year. While this might sound challenging, if Harley can implement the plan well, it could help to expand its customer base significantly.

In the last three to four years, Harley has tried to lure new customers from emerging markets by launching several lightweight motorcycle models. These models included new additions to HOG’s Sportster and the introduction of its street series. During the 3Q17 earnings event, we can expect Harley to update investors on new launches that could be important for market expansion.

Harley-Davidson’s profit margins from its lightweight motorcycles have typically been lower than margins from its heavyweight motorcycles. Likewise, mainstream auto companies (FXD) such as General Motors (GM), Honda (HMC), and Ford (F) also earn higher profits from their heavyweight vehicles than small cars.

Continue to the next part where we’ll take a look at Harley-Davidson’s current valuation multiples before its 3Q17 earnings release.

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