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KeyBanc Raised Polaris Industries’ Price Target to $100 per Share

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Price movement of Polaris Industries

Polaris Industries (PII) has a market cap of $5.9 billion. PII rose by 2.4% to close at $91.29 per share as of February 26, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 6.3%, 30.1%, and 6.2%, respectively.

PII is trading 12.3% above its 20-day moving average, 10.4% above its 50-day moving average, and 22.1% below its 200-day moving average.

The VanEck Vectors Wide Moat Research ETF (MOAT) invests 3.6% of its holdings in Polaris. The ETF tracks an equal-weighted index of 20 companies that Morningstar determines to have the highest fair value among firms with a sustainable competitive advantage. The YTD price movement of MOAT was -0.66% as of February 25, 2016.

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.84% of its holdings in Polaris. The ETF tracks a market-cap-weighted index of growth companies from the S&P 400.

The market caps of Polaris’s competitors are as follows:

  • Textron (TXT): $9.4 billion
  • Harley-Davidson (HOG): $8.3 billion
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KeyBanc upgraded Polaris Industries

KeyBanc Capital Markets has raised Polaris Industries’ price target to $100 from $95 per share and also maintained its “overweight” rating.

Performance of Polaris Industries in recent 4Q15 and 2015

Polaris reported fiscal 4Q15 sales of $1,105.6 million, a fall of 13.3% compared to sales of $1,275.0 million in fiscal 4Q14. The company’s cost of sales as a percentage of sales rose by 1.4% and gross profit margin fell by 2.8% in fiscal 4Q15 compared to fiscal 4Q14. Its net income and EPS (earnings per share) fell to $110.7 million and $1.66, respectively, in fiscal 4Q15 compared to $135.4 million and $1.98, respectively, in fiscal 4Q14.

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Fiscal 2015 results

In fiscal 2015, PII reported sales of $4,719.3 million, a rise of 5.4% YoY (year-over-year). The company’s gross profits rose by 1.5% in fiscal 2015 compared to fiscal 2014.

Also, the company’s net income and EPS rose to $455.4 million and $6.75, respectively, in fiscal 2015 compared to $454.0 million and $6.65, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories rose by 12.9% and 25.5%, respectively, in fiscal 2015. Its current ratio and debt-to-equity ratio rose to 1.39x and 1.42x, respectively, in fiscal 2015 compared to 1.28x and 1.39x, respectively, in fiscal 2014.

The price-to-earnings and price-to-book value ratios of Polaris Industries are 13.5x and 6.1x, respectively, as of February 26, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • EPS in the range of $6.20 to $6.80 per share due to weak industry trends in oil and gas regions of North America and volatility in the currency markets
  • sales in the range of -2% to 3%

Continue to the final part of this series for a look at Whirlpool.

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