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Key Factors to Watch during Harley-Davidson’s Earnings

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Apr. 17 2017, Updated 10:36 a.m. ET

1Q17 earnings event

So far in this series, we covered analysts’ estimates for Harley-Davidson’s (HOG) 1Q17 earnings. Analysts’ estimates suggest prevailing weakness in the company’s upcoming earnings. Analysts expect continued profitability and sales-related challenges.

Now, let’s explore what might be the major highlights of Harley-Davidson’s 1Q17 earnings event.

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New launches

In an investors’ meeting on February 28, Harley-Davidson’s management revealed plans to launch 100 new high impact motorcycles in the market in a decade. On average, it means that Harley-Davidson plans to launch ten new high impact motorcycles every year. If the plan is implemented correctly, it might help Harley-Davidson expand its customer base.

In the last three to four years, Harley-Davidson tried to lure new customers from emerging markets by launching several lightweight motorcycle models. The models included new additions in Harley-Davidson’s Sportster and the introduction of the street series. During its 1Q17 earnings event, we can expect Harley-Davidson to update investors on new launches that will be crucial for its market expansion plan going forward.

Note that for Harley-Davidson’s lightweight motorcycles typically yield lower margins compared to heavyweight motorcycles. Likewise, mainstream automakers (FXD) including General Motors (GM), Ford (F), and Honda (HMC) also make relatively more profit from heavyweight vehicles than small cars.

Updates on new rider training

To generate more sales, Harley-Davidson accelerated its “build new riders” program. The company targets to train ~2 billion new Harley-Davidson riders in the US market alone. In 2016, Harley-Davidson trained more than 65,000 new riders through its US H-D Riding Academy. During its upcoming earnings event, it will be interesting to see how the training program is translating into sales for the company.

In the next part, we’ll look at Harley-Davidson’s current valuation multiples before its 1Q17 earnings release.

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