uploads/2016/04/pii-pm3.png

Polaris Industries’ 1Q16 Earnings: How Did Sales Turn Out?

By

Updated

Polaris Industries’ stock movement

Polaris Industries (PII) has a market cap of $6.3 billion. PII rose by 1.6% to close at $97.79 per share on April 21, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements are 5.1%, 4.5%, and 17.7%, respectively. This means that PII is currently trading 4.8% above its 20-day moving average, 8.1% above its 50-day moving average, and 6.0% below its 200-day moving average.

Article continues below advertisement

Peers and related ETFs

The VanEck Vectors Morningstar Wide Moat ETF (MOAT) invests 3.6% of its holdings in Polaris Industries. 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. MOAT has risen 12.1% YTD as of April 21.

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.84% of its holdings in PII.

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

  • Textron (TXT): $10.6 billion
  • Harley-Davidson (HOG): $8.8 billion

Polaris Industries’ performance in 1Q16

Polaris Industries reported 1Q16 sales of $983.0 million, a fall of 4.9% compared to sales of $1,033.3 million in 1Q15. Sales in the motorcycle segment rose by 18.0%, and sales in the off-road vehicle/snowmobile and global adjacent markets segments fell by 9.5% and 4.5%, respectively, in 1Q16 compared to 1Q15. The company’s cost of sales as a percentage of sales rose by 4.2%, and its operating income fell by 48.7% in 1Q16 compared to 1Q15.

Its net income and EPS (earnings per share) fell to $46.9 million and $0.71 in 1Q16 compared to $88.6 million and $1.30, respectively, in 1Q15.

Article continues below advertisement

Polaris Industries’ cash and cash equivalents and inventories rose by 31.4% and 12.8%, respectively, in 1Q16 compared to 1Q15. Its current ratio fell to 1.4x, and its debt-to-equity ratio rose to 1.5x in 1Q16 compared to a current ratio and a debt-to-equity ratio of 1.5x and 1.4x, respectively, in 1Q15.

The company repurchased and retired 1,040,000 shares of its common stock for $84.9 million in 1Q16. As of March 31, the company has authorization to repurchase up to 9.3 million more shares.

Projections

Polaris Industries has made the following projections for 2016:

  • sales growth in the range of -2%–3% due to overall economic trends and power sports industry trends for the remainder of 2016
  • EPS in the range of $6.20–$6.80

In the next part of this series, we’ll look at an in-depth analysis of Polaris Industries’ segments.

Advertisement

More From Market Realist