Harley-Davidson (HOG) released its first-quarter results on April 23 before the market opened. In the first quarter, the company managed to beat analysts’ consensus earnings estimates of $0.35. Harley-Davidson missed the estimates by a wide margin in the previous quarter. In the quarter ending in March, Harley-Davidson reported an adjusted EPS of $0.80. However, the company’s earnings beat couldn’t boost investors’ confidence. The stock has continued to fall.
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Why is the stock falling?
In the last few years, Harley-Davidson has been facing extreme challenges on the sales front in its home market and the international market. In the first quarter, Harley-Davidson’s revenues fell 12.3% YoY (year-over-year) to $1.2 billion from the motorcycle and related products segment.
A lower contribution from Harley-Davidson’s touring motorcycles hurt its revenues and profitability in the last quarter. The touring motorcycles usually yield higher profit margins compared to its other motorcycles including cruiser and street motorcycles.
In the first quarter, Harley-Davidson’s US retail sales fell 4.2%. In the international market, the company’s retail sales fell 3.3% YoY. During the same period, Harley-Davidson’s motorcycle segment’s operating margin fell to 9.1% compared to 12.7% a year ago.
Despite Harley-Davidson’s better-than-expected first-quarter earnings, the company’s weaker retail sales, lower shipments, and weak operating margin could have caused investors’ pessimism.
As of April 25, Harley-Davidson stock has lost 11.1% in the last five sessions.