Netflix and Harley-Davidson
Winning Trades!

Netflix Stock Climbed – Harley-Davidson Stock Crashed!
Call and Put Stock Options Saved the Day!

by Ian Harvey

July 19, 2017

Here is an overview of the above stocks after reporting earnings. Both trades were placed on Monday, July 17, 2017 with Netflix reporting that afternoon and Harley-Davidson next morning; producing major profits within 24 hours of executing the trades.

Netflix, Inc. (NASDAQ:NFLX) Calls

The Options Trade for the “Armchair Members”

 

** OPTION TRADE: Buy the NFLX AUG 18 2017 170.000 CALL at approximately $4.50. Place a pre-determined sell at $9.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.80.

The report………..

Netflix Inc. released a profit for its second quarter that rose from last year.

The company said its bottom line came in at $65.60 million, or $0.15 per share. This was higher than $40.76 million, or $0.09 per share, in last year's second quarter.

Analysts had expected the company to earn $0.16 per share, according figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

The company said revenue for the quarter rose 32.2% to $2.79 billion. This was up from $2.11 billion last year.

End Result……….

Netflix closed Monday at $161.70, but opened Tuesday morning at $176.12, and climbed to $ 185.00 during the day.

The Trade……..

Within 24 hours this trade produced a 100% profit!

Harley-Davidson Inc (NYSE:HOG) Puts

The Options Trade for “Cut-to-the-Chase Members”

As a password is required to access the trade information until the trade expires…..I will add the recommended trade information for your benefit.  

** OPTION TRADE: Buy the HOG AUG 18 2017 50.000 PUT at approximately $1.40. Sell price is left to your own judgment.

The Recommendation

Harley-Davidson Inc (NYSE:HOG) will release its Q2 2017 results tomorrow, July 18, 2017, before the market opens. The company is facing a continuous decline in its sales as it does not find favor with the highest spending generation in the U.S. - the millennials.  According to Alliance Bernstein, this younger generation is "adopting motorcycling at a far lower rate than prior generations," leading to the decline in sales of Harley-Davidson.  Consequently, consensus revenue and EPS (earnings per share) estimates for the company for Q2 2017 are lower than those for the same period last year.

Brokerages expect Harley-Davidson, Inc. to announce earnings per share of $1.37 for the current fiscal quarter. Eight analysts have provided estimates for Harley-Davidson’s earnings, with the highest EPS estimate coming in at $1.43 and the lowest estimate coming in at $1.29. Harley-Davidson reported earnings per share of $1.55 in the same quarter last year, which suggests a negative year-over-year growth rate of 11.6%.

Harley-Davidson, Inc is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company operates in two segments: the Motorcycles & Related Products (Motorcycles) and the Financial Services. The Motorcycles segment consists of HDMC, which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles, as well as motorcycle parts, accessories, general merchandise and related services.

Influencing Factors

Harley-Davidson continues to expect stiff competition, which may hurt its retail sales as competitors rely on discounts and product introductions to boost the same. The weak demand in Asia Pacific is expected to continue through the second half of 2017. Also, retail inventory in the U.S. is expected to lie low in the second quarter.

Based on end of quarter dealer checks Longbow Research estimates that there could be a 1-3% decline in the company's U.S. sales for this quarter; this is disappointing since the comparative number - Q2 2016 was soft when the sales had declined by more than 5%. The overall outlook for this quarter indicates a declining revenue and earnings trend.

Harley-Davidson anticipates motorcycle shipments in 2017 to be either at the same level or slightly lower than 2016. In second-quarter 2017, the company hopes to ship 80,000 to 85,000 motorcycles, compared with 88,160 motorcycles shipped in the year-ago period.

The company's Financial Services segment is also expected to show a downtrend in operating income mainly due to higher borrowing costs and credit losses. In the previous quarter, the segment's operating income declined 6.6% year over year.

Harley-Davidson will be paying $15 million as settlement charges to the Environmental Protection Agency (EPA) due to its "super tuners" releasing harmful emissions despite bolstering power. Of the total amount, $3 million will be spent to replace conventional woodstoves with cleaner-burning in the faulty models to mitigate air pollution. Per the deal, it will buy back all the devices and discontinue future sales of the product. These actions will add to its expenses.

Analysts and Hedge Funds Opinions

Shares of Harley-Davidson, Inc. have been given a consensus recommendation of “Hold” by the twenty-seven ratings firms that are covering the firm. One equities research analyst has rated the stock with a sell recommendation, twenty have given a hold recommendation and six have given a buy recommendation to the company. The average 12-month price objective among brokerages that have issued ratings on the stock in the last year is $55.75.

Harley-Davidson, Inc.‘s stock had its “hold” rating reiterated by equities researchers at Jefferies Group LLC in a research report issued on Tuesday, July 4th. They currently have a $49.00 target price on the stock. Jefferies Group LLC’s price objective points to a potential downside of 5.06% from the company’s current price.

Also, Harley-Davidson, Inc. was downgraded by analysts at Sanford C. Bernstein from an "outperform" rating to a "market perform" rating. The Bernstein analyst covering the name cited a so-called secular erosion on demand for motorcycles, and noted sales of new model bikes have been disappointing. They lowered their price target from $62 to $55.

And, Goldman Sachs came in with a neutral rating and an even lower $51 price target. They cited that its channel checks for Q2 sales show at best a flat performance, although I am expecting declines.

As well, Caxton Associates LP lowered its stake in Harley-Davidson, Inc. by 89.1% during the first quarter, according to its most recent Form 13F filing with the SEC. The fund owned 35,000 shares of the company’s stock after selling 285,000 shares during the period. Caxton Associates LP’s holdings in Harley-Davidson were worth $2,118,000 at the end of the most recent reporting period.

Summary

Harley-Davidson has a 52 week low of $45.34 and a 52 week high of $63.40. The firm has a 50 day moving average price of $53.81 and a 200-day moving average price of $57.40. The stock has a market capitalization of $9.08 billion, a price-to-earnings ratio of 14.72 and a beta of 0.86.

…….end of recommendation

The report………..

Harley-Davidson shipped 81,388 motorcycles during the second quarter, a 6.7% decline from last year’s second quarter. Worldwide retail motorcycle sales fell 6.7% year over year. U.S. motorcycle sales fell 9.3%. The company’s U.S. market share stood at 48.5% in the 602cc-plus segment during the second quarter. International retail sales declined 2.3%.

Harley-Davidson also slashed its outlook for motorcycle shipments this year to a decline of 6% to 8%. The company’s previous outlook had been “flat to down modestly.” The company expects motorcycle shipments during the third quarter to be down by 10% to 20%, which would be a range of 39,000 to 44,000.

End Result……….

After the Harley-Davidson Q2:F17 earnings report, the company’s stock opened lower by as much as 10% Tuesday morning.

The Trade……..

This trade was purchased at $1.40 on Monday; and during the day Tuesday, climbed as high as $8.95 – giving a potential profit of 539%.

ACTION TO TAKE

If you interested in being part of this profitable action just click here……

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