Harley-Davidson
What analysts say
- Buy, sell, or waffle? Of the 17 analysts who ride Harley, only three think it's a buy. Eleven more rate this hog a hold, and three more would butcher it.
- Revenue. Analysts predict a 6% slide in sales to $1.3 billion.
- Earnings. Profits are predicted to fall further, down 26% to $0.58 per share.
What management says
"Goodbye!"
Which maybe shouldn't surprise us. Just two months before (now ex-) CEO Jim Ziemer said his goodbyes to Harley, he was warning that the "global economy and consumer concerns [will] continue to create challenges for Harley-Davidson through the end of the year and in 2009." By year-end, profits are looking to come in somewhere between $3.00 and $3.10, with analysts projecting $3.03 per share.
Meanwhile, the company's hefty capital expenditures and lack of positive cash flow continue to drain Harley's balance sheet of crucial ballast. Based on fiscal-year projections, expect capital expenditures for the fourth quarter to be in the neighborhood of $81.3 million to $96.3 million. And based on the cyclical fiscal year, Harley may use a significant chunk of cash on operations: over the past two years, the fourth quarter drew negative cash from operations to the tune of more than $500 million.
What management does
With the news seemingly bad, might I be so bold as to point out one bright point? As bad as things have gotten, this company is still amazingly profitable, considering the industry it's in. I mean, seriously, folks, when's the last time you saw any of Harley's four-wheeled kin earning a 20% operating profit margin? The best Honda
7/07 |
9/07 |
12/07 |
3/08 |
6/08 |
9/08 |
|
---|---|---|---|---|---|---|
Gross |
39.0% |
38.6% |
37.9% |
37.7% |
36.8% |
35.5% |
Operating |
25.2% |
24.3% |
23.2% |
22.8% |
21.6% |
20.0% |
Net |
16.5% |
16.0% |
15.2% |
14.9% |
13.9% |
12.5% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says …
Yesterday, an analyst from Piper Jaffray
Still, if you look a little farther down the road than Piper Jaffray's peering, I have to wonder whether there's a turnaround in Harley's future. With the stock selling at 4 times its trailing earnings, and with analysts expecting 9% growth over the next five years (and once we get ourselves out of this here economic pothole), time may prove Piper's advice a little short-sighted.
More on Harley, while you await the earnings news: