Harley-Davidson Motor Company (NYSE:HOG) stock has dropped over 9% to $56.03 a share by early afternoon on Tuesday. The famed motorcycle manufacturer missed revenue expectations and announced that it has lowered its yearly forecast of motorcycle shipments.
The company blames discounted prices among competitors for fewer shipments.
Although company revenue didn’t meet analyst expectations, the company’s profits beat expectations due to a reduced tax rate. Harley-Davidson earned $269.9 million last quarter. A year earlier, the company earned less at $265.9 million.
Analysts estimated an EPS (earnings per share) of $1.24, and the company’s EPS rose to $1.27. Lower tax rates, 34.4% instead of 35%, helped the company boost profits despite missing revenue estimates.
Revenues hit $1.51 billion on the quarter, missing estimates of $1.58 billion.
The company has revised shipping estimates from 282,000 – 287,000 down to 276,000 – 281,000 motorcycles.
President and CEO of Harley-Davidson, Keith Wandell, states that the company lowered its estimates for precautionary reasons, and expects increased competition and discounting amongst competitors. The lower estimates will help the company manage supply and be better aligned with the industry demand.
Harley-Davidson is in an interesting position. The company does not want to tarnish its premium product, yet competitors with lower prices are starting to take some of the market share away from the brand.