Last week, which ended on September 29, 2017, Harley-Davidson stock (HOG) traded on a mixed note and ended the week at $48.21 with a minor weekly loss of 0.10%. The stock has fallen ~10.8% quarter-to-date and has seen a value erosion of 17.4% so far in 2017.
What could be driving range-bound movement?
In 2Q17, Harley’s adjusted earnings were at $1.48 per share. That was about 4.5% lower than its earnings in the same quarter of the previous year.
HOG’s profit margins haven’t seen any significant positive growth in the last few quarters due to an unfavorable product mix. For Harley, lightweight motorcycles tend to yield lower profit margins than heavyweight motorcycles. Legacy automakers (FXD) Ford (F), General Motors (GM), and Honda (HMC) also make higher profits from heavyweight vehicles than from small cars.
HOG’s management doesn’t expect any improvement in its fiscal 2017 profit margins. All these factors could be the key reasons for its range-bound movement on Wall Street.
Could October be positive?
In September, HOG stock rose 2.6%. On October 2, 2017, the price retested a support near $48.10 and closed on a positive note at $48.55. Now, an immediate resistance lies near $49.60 followed by a key resistance near $51.90. Any sustainable violation of the $49.60 resistance in October could attract fresh buying in HOG stock.
On the daily price chart, HOG’s 14-day RSI (relative strength index) indicator was hovering near the line of equilibrium at 52.2. That indicates a mixture in the underlying momentum.
In the next part, we’ll see how AutoZone stock traded in September after its fiscal 4Q17 earnings release.