Harley-Davidson (NYSE:HOG) stock crashed and burned after reporting Q4 and full-year earnings on Tuesday. Down as much as 10% in early trading, Harley shares are still off by 7% as of 2:50 p.m. EST.
Harley-Davidson actually beat earnings for the quarter. The company's quarterly revenues of $1.23 billion surpassed analyst estimates for $1.01 billion in sales. Similarly, the $0.05 per share that Harley earned in Q4 ($0.54, adjusted for "pre-tax expenses and non-recurring costs," including charges related to U.S. tax reform), were more than the $0.46 per share in pro forma profits that Wall Street analysts had predicted Harley would earn.
Despite beating earnings, Harley-Davidson's numbers were not great, objectively speaking. The $0.05 per share profit represented an 82% decline in GAAP earnings year over year, despite sales growing 11%.
For the full year, profits declined 21% to just $3.02 per share on a 6% decline in sales to $5.65 billion.
Judged by motorcycle "units" sold, the news was just as bad. Worldwide bike shipments declined 10% in Q4, but only 7% for the year -- suggesting that the situation with motorcycle demand may have gotten worse as the year progressed.
It's not the weak sales performance, and certainly not the earnings beat -- or indeed, how Harley fared in 2017 at all -- but where Harley is heading next may be what did it in Tuesday morning. Wrapping up its report, Harley-Davidson issued new guidance for its fiscal year 2018 outlook.
Management expects to ship only 60,000 to 65,000 motorcycles in Q1 of this year, and only 231,000 to 236,000 motorcycles over the entire 12 months. Thus, unit shipments that declined 8% in 2017 seem set to decline by as much as another 4% to 5% in 2018.
And that's why investors are selling Harley-Davidson stock on Tuesday.