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Harley-Davidson (HOG): Will It Disappoint in Q4 Earnings?

Harley-Davidson, Inc.HOG is set to report fourth-quarter 2016 results on Jan 31. In the last quarter, the company posted a positive earnings surprise of 1.59%. Further, Harley-Davidson managed to beat earnings in all of the last four quarters, with a positive average surprise of 6.24%.

Let us see how things are shaping up for this announcement.

Factors Influencing this Quarter

Harley-Davidson commands a large market share that provides scale advantages over most competitors. The company is expanding its product portfolio to increase its customer base. Its large share in the U.S. motorcycle market and consistent capital deployment are other positives. However, Harley-Davidson expects stiff competition to hurt retail sales this quarter as competitors rely on discounting and product introduction to boost sales. Further, the company anticipates macroeconomic challenges in some regions.

In the fourth quarter of 2016, Harley-Davidson expects motorcycle shipments of 44,200−49,200, the mid-point of which is lower than 48,149 motorcycles shipped in the year-ago quarter. The company expects the year-over-year change in shipments to vary between a decline of 1% and a rise of 1% in 2016. The weak guidance is due to softness in the U.S. market, intense competition and global economic uncertainty.

Earnings Whispers

Our proven model does not conclusively show that Harley-Davidson is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for Harley-Davidson is -6.25% because the Most Accurate estimate is 30 cents and the Zacks Consensus Estimate stands at 32 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Harley-Davidson, Inc. Price and EPS Surprise

Harley-Davidson, Inc. Price and EPS Surprise | Harley-Davidson, Inc. Quote

Zacks Rank: Harley-Davidson carries a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

Harley-Davidson underperformed the Zacks categorized Auto Manufacturers-Domestic industry in the last three months owing to a slashed shipment guidance and stiff competition which will hurt retail sales. The company's shares gained 7.3% in the last three months, compared with the industry's 19.9% hike.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Wabash National Corporation WNC has an Earnings ESP of +2.63% and a Zacks Rank #2. The company is slated to report fourth-quarter and full-year 2016 results on Jan 31. You can see the complete list of today's Zacks #1 Rank stocks here.

Autoliv Inc. ALV has an Earnings ESP of +3.85% and a Zacks Rank #3. The company's fourth quarter and full-year 2016 financial results are scheduled for release on Feb 2.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report fourth quarter and full-year 2016 financial numbers on Feb 10.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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