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KeyBanc Capital Raises Polaris’s Price Target to $110 per Share

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Polaris Industries’ price movement

Polaris Industries (PII) has a market cap of $6.1 billion. PII rose by 2.9% to close at $94.32 per share on April 8, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -4.1%, -1.6%, and 10.4%, respectively, on the same day. This means that PII is trading 3.0% below its 20-day moving average, 5.8% above its 50-day moving average, and 13.9% below its 200-day moving average.

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A related ETF and peers

The Vanguard Mid-Cap ETF (VO) invests 0.26% of its holdings in Polaris. The ETF tracks the CRSP US Mid Cap Index, a diversified index of midcap US companies. The YTD price movement of VO was -0.28% on April 7, 2016.

The Vanguard Extended Market ETF (VXF) invests 0.19% of its holdings in Polaris. 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 Industries’ competitors are as follows:

  • Harley-Davidson (HOG) – $8.4 billion
  • Textron (TXT) – $10.1 billion

KeyBanc Capital raises Polaris’ price target

KeyBanc Capital Markets has raised Polaris Industries’ price target to $110 from $100 per share and maintained the rating as “overweight.” It has projected a 30% sales growth for the company during the first quarter of 2016. TheStreet rated Polaris as a “buy” with a “B-” score.

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Performance of Polaris Industries in 4Q15 and 2015

Polaris Industries (PII) reported 4Q15 sales of $1.1 billion, a fall of 13.3% from the sales of $1.3 billion in 4Q14. The company’s cost of sales as a percentage of sales rose by 1.4%, and its gross profit margin fell by 2.8% between 4Q15 and 4Q14.

Polaris’s net income and EPS (earnings per share) fell to $110.7 million and $1.66, respectively, in 4Q15, compared with $135.4 million and $1.98, respectively, in 4Q14.

2015 results

In 2015, Polaris Industries reported sales of $4.7 billion, a rise of 5.4% YoY (year-over-year). The company’s gross profit rose by 1.5% between 2014 and 2015. Also, the company’s net income and EPS rose to $455.4 million and $6.75, respectively, in 2015, compared with $454.0 million and $6.65, respectively, in 2014.

Polaris’s cash and cash equivalents and inventories rose by 12.9% and 25.5%, respectively, in 2015. Its current ratio and debt-to-equity ratio rose to 1.39x and 1.42x, respectively, in 2015, compared with 1.28x and 1.39x, respectively, in 2014.

Projections

Polaris Industries (PII) has made the following projections for 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 currency markets
  • sales in the range of -2%–3%

In the next part of this series, we’ll look at The Boston Beer Company.

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