Harley-Davidson Roars Back To Life Harley-Davidson (NYSE: HOG) began to implement its Hardwire strategy in the nick of time. The company's efforts to improve operations and brand appeal are paying off in spades and have...

Hardwired Harley-Davidson Exceeds Expectations

Harley-Davidson (NYSE: HOG) began to implement its Hardwire strategy in the nick of time. The company's efforts to improve operations and brand appeal are paying off in spades and have the stock deep into a reversal that could still add double-digits to investor portfolios. Not only is the strategy working but there is also the planned spin-off of Livewire, the company's EV segment, to consider. Investors who own Harley-Davidson now are sure to benefit from that event as well as the ongoing transformation that is driving results today.

"Harley-Davidson delivered a strong finish to the year, in which we have seen proof points on all elements of our Hardwire Strategy," said Jochen Zeitz, Chairman, President, and CEO, Harley-Davidson. "Looking ahead, we are fully committed to achieving our long-term Hardwire Strategy, as the most desirable motorcycle brand and company in the world."

Harley-Davidson Rips Past The Analysts' Consensus

Harley-Davidson put in a great quarter driven by strong sales in the U.S., product pricing, and a favorable mix. The company reported $1.06 in net revenue for a gain of 40% over last year. The core Harley-Davidson Motorcycle group saw its revenue come in at $816.02 or 80.30% of the net when adjusted for the finance side of the business. The company says unit sales were up 39% with similar strength in parts, merchandise, and licensing which helped to drive unit sales 2200 basis points above the Marketbeat.com consensus estimate.

Moving down, the company reported a 200 basis point contraction in the gross margin attributed to headwinds within the economy. That said, the full-year gross margin came in at 28.6% or up 320 basis points from last year and some expansion is expected in the coming year. On the operating end, the operating margin came in at 9% versus -5.7% last year leaving the adjusted EPS well above consensus. The adjusted $0.15 reverses a loss in the previous year and beats consensus by $0.48.

The company did not give guidance for earnings but is expecting to see revenue grow by 5% to 10% with operating margin expansion to 11% to 12%. This should drive solid results on the bottom line but the GAAP earnings are expected to decline due to investment in company operations meant to further the Hardwire initiatives.

Harley-Davidson's Dividend Is A Bargain, Now

Harley-Davidson pays a dividend that we view as safe in the current environment. The company is still paying out less than half of the pre-pandemic distribution with the business well on the mend. Revenue is beginning to surpass the pre-COVID levels with margins widening and earnings coming in strong. The current payout is $0.63 or about 1.75% of share prices and only 13% of the consensus for earnings so there is room to raise it, if not back to where it was then close.

The Technical Outlook: Harley-Davidson Rises To Key Resistance

Shares of Harley-Davidson popped more than 10% in the wake of the earnings report and look ready to move higher. The move is aided by a relatively high 10% short interest that may provide some resistance at the $41.50 level. Assuming the stock can get firmly above that level, we see Harley-Davidson shares trending back up to the $50 level and maybe higher.