Earnings Preview: Harley-Davidson 2Q results

NEW YORK, NY – July 18, 2011 – (Motor Sports Newswire) – Harley-Davidson Inc. (NYSE: HOG) could see its first increase in U.S. motorcycle sales in five years when it reports second-quarter results on Tuesday.

A healthier economy could drive up sales. More Americans buying bikes could signal a turning point in the motorcycle maker’s recovery from a slump caused by the Great Recession, which hurt sales of big-ticket toys.

WHAT TO WATCH FOR: Even though Harley-Davidson posted a sales increase for the first quarter of this year, it was as a result of higher overseas demand. But things could be different this quarter.

William Blair’s Sharon Zackfia said Harley-Davidson could post a “low-single-digit increase” in domestic retail sales for the second quarter, up from roughly flat results in the previous two quarters and marking the first time the company has done so since 2006.

Zackfia rated Harley-Davidson at “Outperform.” She said she expects the company’s second-quarter profit to meet her prediction of 72 cents per share, although the amount of restructuring charges included in the quarter remains uncertain.

WHY IT MATTERS: Motorcycles, especially Harley-Davidson’s often pricey, customized models, are considered luxury items and not necessities. As a result, bike sales tend to fall during tough economic times.

When the economy took a turn for the worse, Harley-Davidson’s sales plunged and the company shuttered plants and eliminated thousands of jobs. A pickup in second-quarter domestic sales could bode well not just for Harley-Davidson, but also for the U.S. economy.

WHAT’S EXPECTED: Analysts, on average, expect a second-quarter profit of 72 cents per share on $1.26 billion in sales, according to a FactSet survey.

LAST YEAR’S QUARTER: For the second quarter of 2010, Harley-Davidson’s profit nearly tripled to $71.2 million, or 30 cents per share. Excluding discontinued operations, the company made 59 cents per share. Revenue was flat at $1.14 billion.