Harley-Davidson (NYSE:HOG) started off the year riding high in 2008. But after back-to-back earnings disappointments in the second and third quarters, things are looking bleak for the motorcycle maker. Can Harley pull out of its skid in the fourth and final quarter of the year? We'll find out Friday.

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 (NYSE:HMC), Toyota (NYSE:TM), or Nissan (NASDAQ:NSANY) can manage is around 6%-7%; Ford (NYSE:F) and General Motors (NYSE:GM) seem incapable of even breaking even.

Margins

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 (NYSE:PJC), believing that these shares remain in freefall, cut his estimates of the company on an expected 20% decline in December sales. And yes, the analyst could be right -- on both points.

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:

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Fool contributor Rich Smith owns no shares of any company named above. The Motley Fool has a disclosure policy.