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HDI-Hogs get Slaughtered |
rffrydr
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 Posted: Tue May 30, 2006 10:32 pm Post subject: HDI-Hogs get Slaughtered |
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Time to short nostalgia, the stock of a generation (of men)?
I remember when HDI's market cap surpassed GM. It was crazy then and maybe even crazy now. Last week saw the Millionth addition to the Harley "team." Emergency rooms are stuffed with over-50 motoring mishaps.
After an announcement into India here's China:
" The new Beijing dealership, one of 1,300 globally, is located outside the eastern edge of the city's Fourth Ring Road. The latest addition opened Saturday, offering its 2006 Fat Boy, Heritage Softail Classic, V-Rod, Electra Glide and Road King models for sale. Prices start at $12,500 and rise to more than $37,500.
The 2005 average income of urban residents in the capital, one of the wealthiest cities in the country, was approximately $2,200, according to Chinese statistics."
http://www.wpherald.com/storyview.php?StoryID=20060410-124416-5303r
Is this growth or is this desperation? WMT, DIS, GM got's nothing on Harley-Davidson. It's a straight line up for a decade. More to come?
It certainly symbolizes conspicuous consumption: "Fat Boy." Isn't that the atomic bomb we dropped on Japan? And there IS a need for that in the fringe 3rd world boom. Look how dogs have found a place in China upper middle class DESPITE the culture (this also goes for, litterally, Orange County houses). Chinese also buy Ferraris and park them. A lorified, ol'glory motorcycle, in a land of motorcycles?????
SEC inquiry in summer 05 marks top. Doing a Krispy Kreme with inventory??? Or just, the last retailer for Easy Rider. |
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HDI-Hogs get Slaughtered Replies |
rffrydr
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| Posted: Wed Jan 25, 2012 10:33 am Post subject: |
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Slap-my-face, we're almost back to 2006 "50" level when this thread began. That most unholy combination of demographics, "discretionarity" and strong connection to building industry would have almost guaranteed a long slow demise.
Against this is the growing trend in "buy american," product differentiation in the nanny-state and a space-convenient bit of brand showoff for the aisiatics. The rich. Add in the hefty 33% margins and minimal capex.
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HenryTo
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HenryTo
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| Posted: Tue Oct 18, 2011 11:25 pm Post subject: |
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Morningstar on HOG's 3Q earnings:
| Quote: | | Harley-Davidson HOG reported third-quarter results that were ahead of our operating income and earnings per share forecasts, helped by higher shipment volume and operating margin improvement, along with strength in the financial services segment. Gross margins, however, were under pressure from a mix shift due to capacity constraints at the York manufacturing facility, higher raw-material costs, and unfavorable foreign exchange. For the quarter, gross margins contracted 120 basis points to 33.7%, resulting in a reduction in full-year gross margin guidance to 33.5%, 100 basis points lower than just one quarter ago. At this writing, the stock is reacting negatively to the revision. Shipment and capital expenditure expectations remain the same as last quarter, and al though we will probably make some adjustments to certain line items in our forecast, there is no change to our $39 fair value estimate. The company appears to be reaching a steady state in retail demand, with last quarter's retail sales growing 5.6% from last year and this quarter's retail sales growing 5.1% from last year. The company's sales, however, were up 78%, supported by shipments to dealers and stronger performance in both high-margin parts and accessories and general merchandise. The company has reaffirmed its shipment guidance for 228,000-235,000 units for the fourth quarter. Last quarter we noted that this implied 20% volume growth in the fourth quarter, which will probably be much higher than the retail demand in the marketplace and may bring forward some production and shipments from 2012 to 2011. Consistent with our thesis, we do not believe Harley will be able to increase shipments ahead of retail sales indefinitely, and as a result of this and global market instability, we expect shipment growth to slow again in 2012. We remain concerned that retail sales may fail to gain the traction implied by recent shipments, potentially putting pressure on the stock. Once economic stability returns, pent-up demand for Harley-Davidson products should materialize and drive both shipments and retail sales to levels we would be more excited about. |
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rffrydr
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| Posted: Tue Jul 19, 2011 8:56 am Post subject: |
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First domestic profit in five years. Once valued for our abundance, american beginning to be valued for our "scarcity."
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HenryTo
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| Posted: Wed Apr 20, 2011 12:15 am Post subject: |
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Morningstar on HOG's 1Q results:
http://quicktake.morningstar.com/Stocknet/377486/harley-returns-to-growth-in-1q-shares-fully-priced-despite-challenges.aspx?symbol=HOG
| Quote: | With these challenges on the horizon, we are maintaining our cautious stance for 2011. Our full-year volume assumption remains at the lower end of Harley's revised guidance of 215,000-228,000 units, so we think the likelihood of a surprise next year lies to the upside. We thought that the previous guidance implied either a fairly solid economic rebound or a rebuilding of dealer inventory, so we were not surprised to see a widening of the forecast at the lower end. Nevertheless, we expect product mix to provide a boost to the top line in 2011, as trikes become a larger part of the product portfolio.
Financial services reported operating income of $67.9 million in the quarter, up from $26.7 million a year ago. The increase was largely driven by continued improvement in credit performance.
Despite the slight contraction of the operating margin in the first quarter, Harley is successfully implementing its cost restructuring, and we think it is on track to rebound to a midteen operating margin this fiscal year. However, with the stock trading about 10% above our fair value estimate before the market open Tuesday, a valuation that implies more than 18 times our estimate for 2011 earnings, we think the market is pricing in perfection in Harley's turnaround. |
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rffrydr
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| Posted: Wed Jan 26, 2011 8:12 am Post subject: |
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$40/share...back to '08 on this one. Wouldn't have thought that possible. But who's the one preaching the "buy america" theme?! 
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HenryTo
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| Posted: Wed Jan 26, 2011 1:49 am Post subject: |
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Morningstar on HOG's 4Q earnings. Stock makes a new cyclical bull market high in response:
| Quote: | | Harley-Davidson HOG beat our revenue forecast in the fourth quarter, boosted by a superior product mix and foreign exchange. These results validate our thesis that the company is executing well on its turnaround, and the firm's guidance that volume will slightly improve in 2011 gives us confidence in our fair value estimate, which remains unchanged. We think the current share price fully reflects the turnaround. Global retail volume declined just 1% year over year, a sequential improvement from the 8% drop in the third quarter and an indication that retail demand may finally be stabilizing after being in free fall since mid-2007. Retail sales in the United States were roughly flat, but fell 2% in international markets, which had hitherto been Harley's saving grace . Revenue grew 27% year over year on the higher volume, but also from a 6% boost from product mix and foreign exchange. Our volume assumption for 2011 is in line with the lower end of Harley's guidance of 221,000-228,000 units, so we think the likelihood of a surprise next year lies to the upside. However, the volume guidance implies either a fairly solid economic rebound or a rebuilding of dealer inventory, so volume may slow in the second half of the year if the recovery fails to take hold, and we are not changing our volume assumptions for the year. While the foreign exchange benefit is probably not sustainable in the long term, we do expect product mix to continue to provide a boost to the top line in 2011, as trikes become a larger part of the product portfolio. International markets may continue to be a drag on revenue, however, as austerity measures in Europe are likely to restrain discretionary consumer spending in Harley's largest overseas market. |
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HenryTo
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| Posted: Tue Oct 19, 2010 10:37 pm Post subject: |
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Morningstar on HOG's 3Q results:
| Quote: | | Harley-Davidson's HOG third-quarter results were in line with our forecasts, supporting our belief that consumers would put high-ticket discretionary purchases on hold in the second half of the year. Our outlook remains cautious, even though the company raised the lower end of its shipment forecast, and we are reiterating our fair value estimate. Global retail volume fell almost 8% year over year, a downturn from the 6% drop in the second quarter, but fairly steady shipments to dealers meant that revenue fell just 2%. Dealer inventory levels are still quite lean, so we regard this as a necessary restocking of showroom inventory ahead of a potential recovery in demand. Notably, retail sales fell 3% in international markets, which had hitherto been fairly robust as Harley built out its distribution platform. Despite some improvement at the gross margin, Harley's operating margin, adjusted for restructuring charges, fell 80 basis points because of higher selling and administrative costs, in part caused by fixed cost deleveraging. We expect the firm will be forced to invest more heavily in its brand, although a rebound in volume should have a positive leverage effect on its operating margin. The financial services segment swung to an operating profit of $51 million from a $32 million loss a year ago, thanks to a lower-cost funding environment and falling credit losses. On a positive note, Harley raised the lower end of its full-year shipment forecast, which is now 207,000-212,000 units, up from 201,000-212,000 previously. We had forecast volume at the lower end of this range and so we shall raise our full-year forecast slightly. However, we do not expect to raise our fair value estimate, because retail sales are likely to remain sluggish well into next year, and any incremental shipments made in the remainder of 2010 are likely to come at the expense of volume in early 2011. |
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rffrydr
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| Posted: Tue Apr 20, 2010 3:20 pm Post subject: |
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| Quote: | Tim Melvin
Harley Report
4/20/2010 12:06 PM EDT
Look at Harley roar. It is the latest example of less bad being great on Wall Street. Revenues continued to decline and earnings fell 72% for the year. Global sales were down 18% with most of the decline occurring in the US markets. The company also announced that shipments would be lower in 2010 than they were in 2009. The CEO of Harley said that the business would remain challenging this year due to uncertain economic conditions. Naturally this is all considered great news and the stock is up 8%. Why? Well, naturally because they did better than the highly accurate Wall Street analysts estimated of course.
You really can't make this stuff up. |
Continue to believe these guys will benefit from stealth buy-american theme upon us and "trade-down" from the custom stuff. The Demographics play is fading but it's a long trend. Paradox of Thrift encompasses new ideas in risk-taking for their customers--and for me. So just gonna have to step aside from any trade here.
I can't comfortably discount a PrivateEquity deal with the Buffett brand attached.
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rffrydr
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| Posted: Tue Apr 06, 2010 11:02 am Post subject: |
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Survival trade vanishing in the rear-view mirror but still blessed with the golden touch of Buffett.
Now comes the Private Equity takeover talk:
http://www.reuters.com/article/idUSTRE62F4J620100316
India and China (unlike Japan) are not going to be part of the equation. $35+ and may have my first short here. Risk? Two-tier economy is alive and well--in blue collar world. Customizers actually work against the the celebrity effect so call that a wash.
Insiders should be worth watching up here.
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HenryTo
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| Posted: Fri Jan 22, 2010 6:41 pm Post subject: |
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Morningstar's latest earnings notes on HOG:
| Quote: | | Harley-Davidson's HOG fourth-quarter results support our thesis that the company will emerge from the economic crisis, but that the road ahead will be bumpy. We are maintaining our fair value estimate. Harley shipped more motorcycles worldwide than we had forecast, but with retail demand still falling -- global retail sales fell 21% year-over-year -- we now expect the company to cut shipments to dealers in the first quarter of 2010. We expect the recovery in demand for motorcycles to lag the economic cycle, so we anticipate further volatility in Harley's top line over the next few quarters, but the erosion of the company's profitability in the fourth quarter was a surprise to us. Gross margin slipped from 32% in the fourth quarter of 2008, when demand was already in freefall, to just 20% this year, as the company's efforts to slash fixed costs failed to yield the desired cost savings during the quarter. There was a slight deterioration in Harley's balance sheet in the quarter, with net debt increasing to over $4 billion from $3.6 billion at the end of the third quarter. However, the company continues to sell finance receivables, a significant improvement from its situation a year ago, and a very positive sign for the short-term survival of the company. We think Harley's strategy of focusing on its core brand is a sensible one, and we expect the discontinuation of the less profitable Buell line to yield margin improvement in 2010. We also regard the company's move into the lucrative Indian market as being an exciting long-term opportunity. However, given the sharp decline of the company's hitherto quite robust gross margin, we would not be surprised to see Harley implement further cost-cutting measures over the next few months. |
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rffrydr
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nodoodahs
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| Posted: Thu Dec 03, 2009 10:43 am Post subject: |
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Not just a Harley thought, but a general comment on motorcycles:
From a dollar/mile standpoint, the small-engine gasoline motorcycle (or scooter) is still far, FAR "greener" than anything the electric market can provide.
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rffrydr
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| Posted: Thu Dec 03, 2009 9:55 am Post subject: |
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HOG has agreed to cut about 50% of its work force.
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HenryTo
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| Posted: Thu Jul 16, 2009 8:40 am Post subject: |
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Harley-Davidson again slashes expectations:
http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200907160646DOWJONESDJONLINE000514_univ.xml
| Quote: | Harley-Davidson Inc.'s (HOG) second-quarter earnings plunged 91% amid its planned decline in shipments as the motorcycle maker will cut 1,000 more jobs and slashed its forecast for shipments again.
The company said it would cut another 700 hourly production workers and 300 non-production, mostly salaried workers, as a result of the lowered shipment volume. It slashed its expectations for this year's shipments, saying it now expects to ship 212,000 to 228,000 motorcycles this year, compared to April's estimate of 264,000 to 273,000.
Harley Davidson had already cut 1,400 to 1,500 hourly jobs earlier this year. The company has about 9,300 workers. |
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