Romain LaFabregue/AFP via Getty Images
Stock in
is on the move after the motorcycle maker reported solid first-quarter results Monday evening. The good numbers, however, aren’t the only reason the shares are higher.
Harley (ticker: HOG) stock was up almost 4% in early trading Tuesday after rising nearly 10% Monday. That pushes the year-to-date gain in Harley stock to more than 25%, which is better than the comparable moves in the
and
Harley reported $1.68 in per-share earnings from $1.4 billion in sales. Wall Street was looking for $1.3 billion in sales and about 89 cents in per-share earnings. EPS doesn’t often come in at nearly double what Wall Street anticipates, so it is no surprise that the stock rose.
But management also sounded upbeat on an earnings conference call that began at 9 a.m. Eastern time. Demand is jumping as inventories of bikes are falling.
Management noted a pickup in demand in March that they attributed to a number of factors, including the annual rollout of new models. Government spending to fight the economic damage from the pandemic was another factor.
The upshot is that Harley’s factories are now running at full capacity. “We are assessing opportunities to increase production in the third and the fourth quarter,” said Gina Goetter, the CFO, on the conference call. Efforts to boost output of existing models won’t affect Harley’s ability to produce new bikes for 2022, she said.
Higher demand and limits on production are resulting in falling inventories. “I think the way we came out of Q1 is quite extraordinary and the dealers that want more,” said Jochen Zeitz, Harley’s chairman, president, and CEO. “We are seeing transaction values near or at MSRP, which is great. We’ve seen used bike prices up significantly.”
MSRP, short for manufacturer’s suggested retail price, is the sticker price. It seems there isn’t a lot of haggling over prices going on now right now. Getting outside appears to be more important to buyers than getting a good deal on a new, or used, bike.
Write to Al Root at allen.root@dowjones.com
