I've never used a motorcycle before in my life and don't know much about the vehicles, but I recognize that Harley-Davidson, Inc. (NYSE: HOG) is an American icon whose product represents an aspirational brand. Even so, the company and its stock finds itself on hard times. The company's latest earnings report is reflective of the current economic malaise.
The first paragraph of the Q2 release tells me almost all I need to know. Revenues declined almost 3% to $1.57 billion. Net profit on a dollar basis dropped sharply by 23%, coming in at $222.8 million. Diluted earnings per share decreased by nearly 17% to $0.95. These numbers are not good. Also, in terms of cash flow, cash was used to fund operations for the first six months of the fiscal year as opposed to being generated. Yet another negative.
As I write this, Harley-Davidson's stock is up well over 7%. Am I impressed? Not enough to buy. Undoubtedly some of this rise can be attributed to the retreat in oil futures. But do I believe the economy will now be nice to Harley-Davidson? Not yet. The company, like General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F), will still have a rough time selling things that require fuel to run. According to this article, Harley-Davidson did better than expected, but that's little comfort to me. You can make an argument that the stock is cheap, but at the very least, anyone interested in buying it (again, I'm not) better wait till the euphoric rally of the day has faded.
Disclosure: I don't own any company mentioned; positions can change at any time.
Entrepreneur's Journal: Want to get a piece of the Buffett/Goldman honeypot?
The week in preview: No turkey earnings from Tyson, Hormel, Cracker Barrel ...
Comfort Zone Investing: Intel is saying something ... can you hear it?
Reader Comments (Page 1 of 1)
7-17-2008 @ 3:51PM
JoeSlump said...
H D is truly the only real motorcycle in the world !!
7-17-2008 @ 4:36PM
Tim Pacileo said...
I think you are leaving out the fact the as fuel rises more people will look to move to more fuel effieicnt vehicles such as motorcycles which will increase sales for HOG and other similar manufacturers.
My neighbor currently rides his motorcycle to work every day he can as it is currently saving him apx $200/month in fuel costs vs using his car.
7-19-2008 @ 4:48PM
John P. said...
And Harleys are very fuel efficient as far as large motorcycles go. My Sportster gets over 70mpg on the highway.
7-21-2008 @ 11:55AM
jpdr1100 said...
I love to read posts like the first response. Guys who think Harley is the only motorcycle in the world should stay far away stock trading. Blind emotions like those will get you no where but in trouble.
And people who think spending $20,000 on a toy to save fuel are either fooling themselves, or are just repeating the excuse they gave to their wives.