The Key Reasons for Harley-Davidson Stock’s Dismal Performance


Nov. 20 2020, Updated 1:04 p.m. ET

Harley-Davidson stock

Last week, Harley-Davidson stock (HOG) traded on a subdued note, ending the week with a ~0.7% loss at $47.37. The company’s stock has fallen ~12.3% quarter-to-date and 18.8% year-to-date. Let’s take a look at what could be affecting HOG stock.

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Dismal 2017 outlook

In 2Q17, Harley’s adjusted EPS (earnings per share) stood at $1.48, about 4.5% lower its 2Q16 EPS. HOG’s revenue fell ~5.2% YoY (year-over-year) to $1.8 billion. The company reported a 9.3% fall in its global retail sales in 2Q17, which could be the primary reason for its lower revenue. HOG’s US retail sales have stagnated over the last few quarters.

Moreover, Harley-Davidson’s profit margins have not seen any notable growth in the last few quarters due to an unfavorable product mix. For HOG, lightweight motorcycles tend to yield narrower profit margins than heavyweight motorcycles. Similarly, legacy automakers (FXD) Ford Motor (F), General Motors (GM), and Honda (HMC) see higher profits from heavyweight vehicles than small cars. Going forward, the company doesn’t expect any improvement in its fiscal 2017 profit margins, which could continue to affect investor sentiment.

Key technical levels

In August, HOG stock tested the support of ~$46.20, which should continue to act as an immediate support this week. During August, the stock delivered a mixed performance and ended the month with ~0.8% rise. On the upside, an immediate resistance lies near $48, followed by a key resistance of ~$49.90. Visit our Autos page for updates on auto companies.


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