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HOG Stock Tanks after Its First Earnings Miss in Two Years

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Harley-Davidson’s Q4 earnings

Today, US motorcycle pioneer Harley-Davidson (HOG) reported its fourth-quarter earnings before the market opened. The company’s adjusted EPS fell ~76.6% YoY (year-over-year) to $0.11, missing analysts’ estimate of $0.28 by a wide margin. As of 8:20 AM Eastern Time today, HOG stock had fallen 8.2% since yesterday.

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Key setbacks

In the previous seven quarters, HOG beat analysts’ estimates. In the fourth quarter of 2018, Harley-Davidson’s total revenue fell 6.6% YoY to ~$956 million, with its motorcycle revenue falling 7.9% YoY. Its global motorcycle shipments fell 7.9% YoY to 43,489, also lower than the 48,639 units shipped in the third quarter of 2018. This massive fall in the company’s shipments may have been the biggest factor behind its lower revenue and earnings.

The company’s worldwide retail sales fell 6.7% YoY to 39,311 units, with its US retail sales falling 10.1% YoY and its international retail sales falling 2.6% YoY. Although Harley has been struggling to revive sales in its key markets for the last three years, it has yet to succeed at doing so.

Tariffs are hurting HOG

As Harley-Davidson has warned previously, the European Union’s and China’s tariffs on its motorcycles acted as headwinds to its profits in last year’s fourth quarter. In fiscal 2018, the company’s tariffs rose YoY to $23.7 million from $13.4 million.

For many auto companies, including General Motors (GM), Ford Motor (F), and Tesla TSLA), expenses have risen due to higher tariffs. As of yesterday, HOG had risen 7.3% this month, while the S&P 500 (SPY) had risen 5.5%.

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