Shares of Harley-Davidson (HOG 1.64%) jumped 15.5% on Tuesday after the motorcycle maker delivered a surprisingly strong fourth-quarter earnings report.
Harley-Davidson's revenue surged 40% year over year to $1 billion, driven by a 39% rise in motorcycle shipments. The company also enjoyed solid growth in its general merchandise and parts & accessories divisions, which saw revenue increase 46% and 13%, respectively.
Better still, Harley-Davidson is becoming more profitable as it advances its Hardwire strategic plan. CEO Jochen Zeitz is focusing the company's efforts on its most profitable motorcycles while overseeing a more disciplined expansion into its most important international markets.
The strategy helped Harley-Davidson generate an unexpected profit in the fourth quarter. It reported earnings per share of $0.14 compared to a loss of $0.63 in the prior-year period. That was far better than Wall Street's estimates, which had called for a per-share loss of $0.38.
Looking ahead, management projects full-year revenue for Harley-Davidson's motorcycles and related products segment to rise by 5% to 10% in 2022. The company estimates that the division's operating margin will improve 11% to 12%, up from 9% in 2021, as supply chain constraints ease in the second half of the year.
Harley-Davidson also reiterated its commitment to return capital to shareholders via dividends and stock buybacks. With more than $975 million in operating cash flow in 2021, it was able to pay over $92 million in dividends and repurchase $11.6 million worth of its shares. Currently, Harley-Davidson's stock yields a solid 1.5%.