Why the Upgrade?
Harley-Davidson reported disappointing third-quarter 2015 results and lowered its full-year guidance, which pulled down the stock 26.79% in a single trading session post the earnings release. The company's fourth-quarter earnings are also expected to plunge year over year.
However, the scenario for 2016 looks better. Harley-Davidson's earnings per share are estimated to rise 8.19% year over year in the first quarter of 2016 and 12.69% for the full year.
Moreover, the motorcycle manufacturer has a history of outperforming estimates. It has beaten the Zacks Consensus Estimate in three of the trailing four quarters, with a positive average beat of 0.14%.
Although the core motorcycle business is currently witnessing weakness, the operating income of the Financial Services segment has started improving after declines recorded in 2013 and 2014. It grew 1.8% year over year in the first nine months of 2015. Moreover, the company expects it to increase in the full year.
Further, Harley-Davidson is trying to boost motorcycle sales by widening its product portfolio. The company also plans to grow its international dealer network by 150-200 new dealerships by 2020 to expand its customer base.
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