Harley-Davidson (HOG) saw its third-quarter profit fall hard. Net income came in at $42.8 million, or 40 cents a share. A year earlier it was $377.4 million, or $3.10 a share. Wall Street wanted 47 cents. Read one more line of the report, though, and the story changes.
The year-earlier quarter held a gain from a deal involving its retail finance loans, the Journal's Rob Curran reports. That gain made last year's number look big. Revenue slipped to $964 million, short of the $1.07 billion analysts expected. Harley also shipped 8% fewer motorcycles to dealers, 33,616 in all. That was the plan. Dealers had too many bikes on the lot, and the company wanted them cleared before sending more.
Fewer shipped, more sold
Here's the part that matters. Retail sales, the bikes real riders bought, rose 5% worldwide. The company raised its full-year forecast for retail sales to 135,500 to 139,000 bikes. The old range was 133,500 to 138,500. So dealers sold more bikes while taking in fewer new ones. Thinning the lots under CEO Artie Starrs didn't scare riders off.
Harley-Davidson isn't held in any of our model books. We read the report for the lesson, and it's a good one. A headline can say profit slid and be true. It can also rest on a comparison that was never even. Two things weighed on this one, the Journal says. One was last year's gain. The other was a shipment cut Harley chose. It's still a miss, though. Profit and revenue both came in under Wall Street's estimates.
Our read
File this under Behavioral. Two kinds of change show up in a company's numbers, and in yours. One is real. The other is the comparison. Harley's net income fell against a quarter lifted by a one-time gain. Its shipments fell because it chose to ship less. Neither tells you riders stopped buying. The retail number says they bought more. The miss on estimates is real, and we wouldn't wave it away. The habit to build is simple. Find the one-time item before you judge the change.
Now open your own quarterly statement, or the 401(k) app. Find the line that compares your balance to a year ago. Then look for the one-time thing that sat in that window. A rollover landing. A big deposit. A sale, or a withdrawal for a new roof. Any one of them can make a flat year look great or terrible. Strip it out and see what's left. That's the number to plan on, and it's a good place to start your next review with us. You don't judge a whole season by the one afternoon it hailed.