First-quarter results from motorcycle maker
Harley-Davidson
are coming. They will be a good chance for investors to see how U.S. consumers are doing amid rising interest rates and a slowing economy.
Harley (ticker: HOG) is due to report numbers Thursday morning. Wall Street is looking for earnings of $1.39 a share from sales of almost $1.4 billion. A year ago, the company reported per-share earnings of $1.45 from $1.3 billion in sales.
Sales are expected to rise while earnings fall because costs are rising faster than sales. That’s the same issue faced by the overall auto industry.
That pattern is expected to persist for all of 2023. Wall Street projects full-year earnings of $4.59 a share from $5.1 billion in sales. In 2022, the company reported almost $6 in per-share earnings from sales of $4.9 billion.
Harley’s full-year guidance implies sales will be between about $5.1 billion and $5.2 billion, which would be growth of about 4% to 7% year over year, so Wall Street estimates are lining up at the low end of guidance.
UBS analyst Robin Farley says the company’s guidance is aggressive and doesn’t think Americans will buy more motorcycles in 2023 compared with 2022.
Still there are a lot of crosscurrents to consider. Global dealer inventories were up 57% year over year in the fourth quarter. High inventories at dealers can be bad and result in no new orders from dealers to the factory. But inventories are still almost 40% below prepandemic levels. Harley sells a lot of bikes overseas, too.
U.S. consumer spending is still rising year over year, but at a decelerating rate. All the data points taken together make Harley earnings more difficult to call than usual.
Options markets imply the stock will move about 8%, up or down, following earnings. Shares rose almost 11% after the company reported fourth-quarter numbers in February.
Management hosts a conference call at 9 a.m. ET on Thursday to discuss results.
Coming into Thursday trading, Harley stock is down about 11% year to date. The
S&P 500
is up about 6%. The
Dow Jones Industrial Average
is flat.
Write to Al Root at [email protected]
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