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How Will Polaris Benefit from Taylor-Dunn Acquisition?


Mar. 8 2016, Published 2:00 p.m. ET

Price movement of Polaris Industries

Polaris Industries (PII) has a market cap of $6.1 billion. PII rose by 2.2% to close at $94.04 per share as of March 7, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases were 7.0%, 14.2%, and 10.1%, respectively.

PII is trading 10.2% above its 20-day moving average, 14.1% above its 50-day moving average, and 18.2% below its 200-day moving average.

The Vanguard Mid-Cap ETF (VO) invests 0.26% of its holdings in Polaris Industries. The ETF tracks the CRSP US Mid Cap Index, a diversified index of mid-cap US companies. The YTD price movement of VO was -2.3% as of March 4, 2016.

The Vanguard Extended Market (VXF) invests 0.19% of its holdings in Polaris Industries. The ETF tracks a market-cap-weighted version of the S&P Total Market index, excluding all S&P 500 stocks.

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

  • Textron (TXT): $8.9 billion
  • Harley-Davidson (HOG): $9.0 billion
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Polaris Industries has acquired Taylor-Dunn

Polaris Industries has acquired Taylor-Dunn, a leading provider of industrial vehicles. Taylor-Dunn will join GEM, Goupil, Mega, and Aixam, as well as Polaris Commercial Off-Road Vehicle (or ORV) sales in Polaris’s Work and Transportation division. It’s part of Polaris’s Global Adjacent Markets business. Taylor-Dunn will become a wholly owned subsidiary of Polaris.

This acquisition will help the company expand its work and transportation business.

Performance of Polaris Industries in 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 profit rose by 1.5% in fiscal 2015 compared to fiscal 2014.

Its 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.

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 13.9x and 6.3x, respectively, as of March 7, 2016.

Projections for Polaris

Polaris has made the following projections for fiscal 2016:

  • EPS in the range of $6.20–$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%

In the final part of this series, we’ll look at Kellogg’s financing conditions.


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