Few Indicators Flashing Warning Signs for Harley-Davidson, Inc. (HOG)

Let’s reassess the active stocks with an eye toward HOG stock. Just how should we respond to Thursday’s drubbing? Is the mighty fruit now destined to decay? Or is this a mere bruising and nothing more? On 14 March, shares of Harley-Davidson, Inc. (NYSE:HOG) closed lower after a volatile session. The shares dropped -0.04 points or -0.11 percent at $36.44 with a light trade volume of 2.068 million shares. After opening the session at $36.38, the shares went as high as $36.48 and as low as $35.95, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $5.78 billion and now has 158.7 million shares outstanding. Harley-Davidson, Inc. (HOG) stock has gained 1.28 percent of market value in 21 trading days.

HOG stock has a trailing 3-year beta of 1.14, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $3.18 a share in the trailing twelve months. The stock’s value has surged 6.8 percent year to date (YTD) against a decline of -18.75 percent in 12 month’s time. The company’s shares still trade -22.12 percent away from its 1-year high of $46.79 and 16.2 percent up from 52-week low of $31.36. The average consensus rating on the company is 2.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Harley-Davidson, Inc. (HOG) will probably climb 7.22 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $50-month high price target. This represents a whopping 37.21 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $38, which represents a return potential of 4.28 percent when compared to the closing price of the stock of $36.44 on Thursday, March 14. The lowest price target for the stock is $34 — slightly more than -6.7 percent from HOG’s current share price.

History has shown that shares in Harley-Davidson, Inc. have gone up on 19 different earnings reaction days and are predicted to add 0.05 percent when the company reports upcoming earnings. Investors will get their next glimpse of HOG’s Q1 earnings on April 23. Analysts are forecasting revenue to suffer decline of -12.4 percent to $1.19B in the fiscal first quarter, while earnings are seen soaring by nearly -46.77 percent to $0.66 per share. It earned $0.17 per share, worse than the $0.28, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $956M, worse than the $1.05B analysts expected. Earnings are estimated to increase by -3.7 percent this year, 25.8 percent next year and continue to increase by 8.5 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $36.1. Below this, the next support is placed in the zone of $35.76. Till the time, the HOG stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 44.21 on daily chart, which may remain a cause for concern. If the price breaks below $35.76 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $36.63 mark may result into a pull-back move towards $36.82 level.

Shares of Harley-Davidson, Inc. (HOG) are trading at a P/E ratio of 11.48 times earnings reported for the past 12 months. The industry HOG operates in has an average P/E of 15.05. Its P/E ratio went as low as 10.66X and as high as 16.99 over the 5-year span.Further, it is sporting a 1.01 on the Price-to-Sales ratio. Compare this with the industry average P/S of 0.98. 38 percent is the gross profit margin for Harley-Davidson, Inc. and operating margin sits at 12.5 percent. Along with this, the net profit margin is 9.3 percent.