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Raymond James Downgraded Harley-Davidson to ‘Underperform’

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Harley-Davidson’s price movement

Harley-Davidson (HOG) has a market cap of $8.2 billion. After Raymond James downgraded the stock to “underperform,” Harley-Davidson fell by 1.95 to close at $42.90 per share as of January 11, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is -5.8%, -7.0%, and -5.5%, respectively.

Technically, the stock broke the support. It’s trading below all of the moving day averages. Currently, Harley-Davidson is trading 5.5% below its 20-day moving average, 9.2% below its 50-day moving average, and -19.9% below its 200-day moving average.

The Guggenheim S&P Equal Weight Consumer Discretionary ETF (RCD) invests 1.2% of its holdings in Harley-Davidson. RCD tracks an equal-weighted index of large-cap US Consumer Discretionary stocks drawn from the S&P 500. RCD’s YTD price movement is -6.1% as of January 8, 2016.

The iShares Morningstar Mid Core ETF (JKG) invests 0.60% of its holdings in Harley-Davidson. JKG tracks a market-cap-weighted index of US mid-cap firms that exhibit growth and value characteristics as determined by multifactor selection.

Harley-Davidson’s competitors and their market caps are:

  • Polaris Industries (PII) – $5.3 billion
  • Textron (TXT) – $10.6 billion
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Raymond James downgraded Harley-Davidson

Raymond James downgraded Harley-Davidson’s rating from “market perform” to “underperform.”

Harley-Davidson’s performance in fiscal 3Q15

Harley-Davidson reported fiscal 3Q15 revenue of $1,140.3 million—a rise of 0.86% compared to revenue of $1,130.6 million in fiscal 3Q14. Its net income fell to $140.3 million in fiscal 3Q15—compared to its net income of $150.1 million in fiscal 3Q14. It reported an EPS (earnings per share) of $0.69 for fiscal 3Q15 and fiscal 3Q14.

Meanwhile, its cash and cash equivalents and inventories rose by 39.7% and 1.2%, respectively, in fiscal 3Q15—compared to the same period last year. Its long-term DE (debt-to-equity) ratio rose to 2.0 in fiscal 3Q15—compared to the long-term DE ratio of 1.1 in fiscal 3Q14.

Harley-Davidson’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 11.4x and 3.4x, respectively, as of January 11, 2016.

Projections

The company made the following projections for fiscal 2015:

  • motorcycle shipments of 265,000–270,000 units
  • operating margin of ~16%–17%
  • capital expenditure of $240–$260 million
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