Harley-Davidson (HOG 4.57%) stock is sputtering this week. The motorcycle company's share price was down 10.4% from last week's market close heading into this Friday's daily trading session, according to data from S&P Global Market Intelligence.
Harley-Davidson published its third-quarter results before the market opened on Oct. 26. While the company's sales and earnings performance for the period actually came in ahead of Wall Street targets, business trends and guidance from management spurred sell-offs for the stock.
Q3 beats aren't lifting Harley-Davidson stock
Harley-Davidson posted earnings per share of $1.38 on revenue of $1.55 billion in the third quarter. For comparison, the average analyst estimate had expected the business to report per-share earnings of $0.03 on sales of $1.36 billion.
Despite beating sales and earnings estimates, business trends and cautious guidance from management prompted a significant valuation pullback. Revenue in the period was down roughly 6% year over year, and earnings per share were down 22%. Motorcycle shipments also fell 20% annually to roughly 45,300.
What comes next for Harley-Davidson stock?
For the full-year period, Harley-Davidson expects sales for its motorcycle business to come in somewhere between flat and up 3% on an annual basis. Meanwhile, its financial services division is expected to see an operating income decline between 20% and 25%. Turning to the LiveWire electric vehicle business that Harley-Davidson owns a controlling stake in, the business is expected to see motorcycle unit sales between 600 and 1,000 and an operating loss between $115 million and $125 million.
As a result of higher interest rates, Harley-Davidson management has said that it's seeing fewer people opting to buy a motorcycle on financing. Higher interest rates mean that customers who buy a bike on financing wind up paying more across the duration of the purchase. Along with consumers generally becoming more cost-conscious in the face of economic pressures and uncertainty, the near-term macro environment does not look particularly favorable for the company.
