Markets
HOG

Harley-Davidson Roars Past Wall Street Estimates as Cost-Cutting Takes Hold

Harley-Davidson (NYSE: HOG) reported third-quarter revenue and earnings Tuesday morning that blew past analyst expectations.

The outsize performance was not predicated on higher motorcycle sales, but rather on cost-cutting. It suggests the effort to be a profitable, smaller operation has potential.

Man riding motorcycle under bridge

Image source: Harley-Davidson.

Ready to rev higher

Harley-Davidson generated revenue of $1.16 billion, an 8% drop from the $1.27 billion it made last year, but handily beat Wall Street estimates of just $884 million. Motorcycle revenue, though, was just $684 million versus $779 million last year.

Net income was $120.2 million, or $0.78 per share, compared to $86.6 million a year ago, or $0.55 a share. On an adjusted basis, Harley's earnings came in at $1.08 per share, easily surpassing last year's $0.70 and stomping analyst expectations of just $0.29 per share. The bike maker says it was its best third-quarter net income performance since 2015.

The gains, though, were made on the basis of significantly lower expenses as U.S. sales fell 10% versus the year ago. Harley's tax rate, for example, was around 10% this quarter compared with 26% last year.

While much better than the 27% decline experienced in the second quarter, it marks the 15th consecutive quarter that sales fell. The company partly blames the realignment of its new-year model introductions from August to the first quarter.

It was a historically weak quarter, but Harley's declining fortunes have made it a very low bar to step over, and it was unable to do so.

The company is focusing on just 50 core markets while exiting more than 30. Yet it separately announced it would maintain a presence in India by selling its motorcycles through Hero MotoCorp, as was previously rumored.

10 stocks we like better than Harley-Davidson
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Harley-Davidson wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

In This Story

HOG

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More