Zacks Projects Harley 2nd Quarter Profits Up

July 16, 2010
Bryan Harley
Bryan Harley
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Our resident road warrior has earned his stripes covering the rally circuit, from riding the Black Hills of Sturgis to cruising Main Street in Daytona Beach. Whether it's chopped, bobbed, or bored, metric to 'Merican, he rides 'em all.

Harley Davidson Motorcycles
Harley-Davidson’s 2010 Second Quarter Results won’t be out until next week, but Zacks Consensus Estimate project a profit of $0.42 per-share, up from $0.29 per-share reported in H-D’s 2010 First Quarter Results.

On the cusp of Harley-Davidson releasing its 2010 Second Quarter results, preliminary signs bode well for the American motorcycle manufacturer. For the second quarter of 2010, projections approximate a profit of $0.42 per-share and reflect an annualized growth of 56%, according to Zacks Consensus Estimate. In comparison, Harley-Davidson’s first-quarter 2010 income from continuing operations was $0.29 per-share, which was three cents more than Zacks Consensus Estimate.

Should these results hold true, Harley-Davidson will have outdone Zacks Consensus Estimate over the last four quarters. The Motor Company has aggressively pursued means of righting a listing ship. It has gone about this by closing down its Buell operations, divesting the recently acquired MV Agusta, and reducing its workforce. Its Financial Services returned to profitability in the first quarter of 2010, driven by improved credit performance in the retail motorcycle loan portfolio and by a lower cost of funds.

In the last month, two of 12 analysts covering the stock have revised the estimates for H-D upward based on a better retail sales trend that’s been driven by a shortage in inventory. Harley anticipated shipping 201,000–212,000 motorcycles worldwide in 2010, a reduction of 5%–10% from 2009 totals. In that same time frame, one analyst made a downward revision in estimates for 2010 basing their decision on “the company’s gloomy outlook for worldwide motorcycle shipments.” This despite only a 2.8% decline in Harley-Davidson’s retail sales in the international market in the first quarter of 2010 and the recent opening of the first Harley-Davidson dealerships in India.

Harley-Davidson will release its 2010 second quarter results before the market opens on July 20, 2010.

About Zacks Consensus Estimates (courtesy of Zacks Investment Research):

For any given stock there may be from 1 to 40 brokerage analysts following the company and making EPS estimates. For more than 25 years, Zacks has been tracking these individual sell-side analyst estimates and creating consensus EPS estimates. The consensus estimate is the average of all the current estimates made available by brokerage analysts. Consensus estimates are more advantageous because they reduce the risk of any single analyst making an incorrect forecast.

Zacks Consensus Estimate = the average of all current EPS estimates

Zacks calculates a consensus estimate for the current quarter, the next quarter, the current fiscal year, the next fiscal year, and as a long-term growth rate. These consensus estimates are the benchmark by which the company will be judged by the investment community. A company can:

Meet – report the same earnings as forecast
Beat – report better earnings than forecast
Miss – report worse earnings than forecast

Missing a forecast is the most dreaded outcome, since it suggests that a company is not performing as well as investors thought. A stock’s price will often tumble in response to an earnings miss.

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