Why Might Harley-Davidson’s 3Q16 Earnings Disappoint?

In the first part of this series, we discussed how Harley-Davidson’s stock has gained in 3Q16 so far along with the largest US automaker General Motors (GM). Primarily, the company’s steps to protect its margins in recent quarters could be a good reason for this optimism on Wall Street.

In 2Q16, HOG reported adjusted EPS (earnings per share) of $1.55 for the quarter, which is a 7.0% rise over its EPS of $1.44 in 2Q15 and in line with analyst estimates of $1.54.

Investors reacted with mixed sentiments to the company’s 2Q16 earnings report, and the stock closed 0.85% higher on the day of the earnings release. But despite the YoY (year-over-year) rise in HOG’s earnings for the quarter, the company was unable to protect its profit margins in 2Q16.

Analysts are expecting Harley-Davidson’s 3Q16 earnings to be dismal. According to these estimates, the company is likely to post EPS of $0.64 for the quarter, which represents a fall of about 8% from its 3Q15 EPS of $0.69. This expectation appears to be in line with the company’s stagnating sales in the US, its home market.

Among the US automakers (IYK), analysts estimate that General Motors (GM) and Fiat Chrysler Automobiles (FCAU) will see YoY rises in their 3Q16 earnings. General Motors is set to release its 3Q16 earnings on October 25, 2016, while Honda Motor (HMC) is likely to release its 3Q16 results on November 2, 2016.

Continue to the next part for a look at what analysts are recommending for Harley’s stock ahead of its 3Q16 earnings.