Factors That Could Be Keeping Harley-Davidson Stock Rangebound


Dec. 4 2020, Updated 10:52 a.m. ET

Harley-Davidson stock

In the week ended September 22, Harley-Davidson stock (HOG) traded on a mixed note and ended the week at $48.24 with a minor weekly gain of ~0.5%. The company’s stock has lost ~10.7% quarter-to-date and has seen a value erosion of 17.3% in 2017 so far.

Let’s see what could be keeping Harley-Davidson stock rangebound lately.

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Key possible reasons for rangebound movement

In 2Q17, Harley’s adjusted earnings were $1.48 per share, which was ~4.5% lower than its earnings in 2Q16. Moreover, HOG’s profit margins have not seen any notable positive growth in the last few quarters due to an unfavorable product mix. 

The company’s lightweight motorcycles tend to yield lower profit margins compared to its margins from its heavyweight motorcycles. Similarly, legacy automakers (FXD) such as Ford (F), General Motors (GM), and Honda (HMC) also make higher profits from heavyweight vehicles than from small cars.

The company’s management doesn’t expect any improvement in its fiscal 2017 profit margins. These factors could be among the key reasons for its rangebound movement on Wall Street.

No change in technical outlook

In August, HOG stock registered a minor rise of 0.8%. Last week, no major changes were seen in Harley-Davidson stock’s price action, which has been mixed for the last two months. In August, HOG stock tested a support near $46.20, which should act as an immediate support in the coming sessions.

An immediate resistance lies near $49.00, followed by a key resistance near the $51.90 price level. On the daily price chart, the 14-day RSI (relative strength index) indicator was hovering near the line of equilibrium at 52.6. This indicator points to a mixed bias in the underlying momentum.

On the weekly price chart, a price action is limited to a narrow range of $46.60–$48.10 on a closing basis. Only a breach of this narrow range could confirm any upcoming short-term trend in Harley-Davidson stock.

In the final part of this series, we’ll look at some of the key reasons for AutoZone’s stock trading pattern last week after its fiscal 4Q17 earnings release.


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