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Summary
- Harley-Davidson posted a net income of US$120 million in Q3 FY20, an increase of 39 per cent over prior year-over-year, and highest since 2015.
- Harley-Davidson and Hero MotoCorp recently announced partnership to develop and sell Harley moto bikes in India.
- Magna International pays a cash dividend of US$0.40 to its shareholders. The stock has a current dividend yield of 3.08 per cent.
Iconic heavyweight motorcycle manufacturer Harley-Davidson (HOG:US or NYSE:HOG) posted its best net income in the third quarter since 2015. This growth was driven by its “The Rewire” plan for restructuring and cost-cutting. But this plan is now changing to a five-year strategic plan, “The Hardwire”, which will be implemented in 2021.
Harley-Davidson stocks surged over 22 per cent on the back of its earnings announcement. In the backdrop of this development, let us take a comprehensive look at Harley stock along with a Canadian automotive stock Magna International Inc. (TSX:MG):
Harley-Davidson Inc. (NSYE: HOG, HOG: US)
Current Stock Price: US$ 35.40
Harley reported net income of US$120 million in third quarter fiscal year 2020, a 39 per cent year-over-year (YoY) increase, and highest since 2015. Revenue went up 8 per cent YoY to US$1.116 million from US$1.273 million in Q3 FY19. The stock has soared over 66 per cent in the last six months but is down by over 8 per cent year-to-date (YTD).
The C$5.42-billion company kept its dividend pay-out static in three consecutive quarters. It announced fourth-quarter cash dividend of US$ 0.02 per share, payable on 18 December 2020. The motorcycle giant also retained a strong liquidity stance of US$ 4.7 billion at the end of the latest quarter.
The third quarter worldwide retail motorcycles sales tumbled by 8 per cent YoY, selling 538,000 bikes in Q3 FY20 versus 585,000 in Q3 FY19.
Due to uncertainty surrounding the impact and period of the coronavirus pandemic, the company refrained from announcing 2020 financial outlook.
Since the pandemic-led market crash on March 24, the stock has rebounded almost 133.77 per cent. In the last three months, Harley-Davidson’s stocks have surged by nearly 25.35 per cent.
Harley-Davidson's Stock Surged Over 22 Per Cent In One Day On The Back Of Strong Q3 Results. (Image: YTD Chart of HOG Stock/Source: EODHD/Others, Thomson Reuters)
The company has a current dividend yield of 0.266 per cent. Its three-year dividend growth is minus -3.13 per cent and five-year dividend growth is 7.58 per cent.
The stock’s price-to-earnings (P/E) ratio is 58. The return on equity (RoE) is 4.39 per cent and return on assets is 0.65 per cent. The price-to-book (P/B ratio) is 3.34, and its present earnings per share (EPS) is 0.58, as per TMX data.
The stock has a 10-day average trading volume of 1.9 million.
Harley-Davidson & Hero Motocorp Ride Together In India
The iconic motorcycle producer has entered a partnership with Hero MotoCorp (National Stock Exchange: HEROMOTOCO), the world’s largest manufacturer of mid-size motorcycles and scooters in terms of unit volumes.
Hero MotoCorp has agreed to sell and service Harley motorcycles, accessories and riding gears, and apparel in collaboration with the latter’s dealers in India, as a part of the distribution pact.
Hero MotoCorp will manufacture and offer a range of first-class motorcycles under the Harley-Davidson brand name, as per a licensing agreement.
The agreement came in the wake of Harley’s recent exit from the Indian market. Both the companies are expecting mutual benefits through a strong distribution network and customer service.
Magna International Inc. (TSX:MG)
Current Stock Price: C$ 69.19
Ontario-based Magna International is an automotive assembler and supplier company. The company generates almost 94 per cent revenue from North America and Europe.
The automotive parts manufacturer has a current market cap of C$ 20.66 billion. The stock is down over 2.8 per cent YTD.
Since the pandemic-led market crash on March 20, the stock has recovered 95.95 per cent. The automotive stock has soared over 27.5 per cent in the last six months and up nearly 8 per cent in three months.
Magna International pays a cash dividend of US$ 0.40 to its shareholders. The stock has a current dividend yield of 3.08 per cent. Its three-year dividend growth is 11.62 per cent and five-year dividend growth is 15.32 per cent.
The stock’s price-to-cashflow (P/CF) ratio is 10.1, and its debt-to-equity ratio is 0.61. The price-to-book (P/B ratio) is 1.623, as per TMX data.
In the second quarter of 2020, Magna’s light vehicle manufacture declined by 70 per cent in North America and 59 per cent in and Europe. The global light vehicle manufacture declined 42 per cent.
The Canadian automotive vehicle parts manufacturer reported sales of U$ 4.3 billion, a 58 per cent decline, the earnings per share is -C$ 2.17 compared to C$ 1.42 in the second quarter of 2019.
Magna will release its Q3 2020 earnings report on November 13.
