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Polaris President Bennett Morgan Retired

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Price movement 

Polaris Industries (PII) has a market cap of $5.6 billion. It rose by 1.1% to close at $84.38 per share on May 16, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.4%, -11.8%, and -1.2%, respectively. This means that PII is currently trading 10.6% below its 20-day moving average, 11.7% below its 50-day moving average, and 18.0% below its 200-day moving average.

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Related ETFs and peers

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 10.4% as of May 16, 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 culled from the S&P 400.

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

  • Textron (TXT) — $10.4 billion
  • Harley-Davidson (HOG) — $8.2 billion

Polaris’s president and COO retired

Bennett Morgan, Polaris’s president and chief operating officer, retired, and Scott Wine will take over responsibilities.

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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.

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

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 the authorization to repurchase up to 9.3 million more shares.

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Quarterly dividend

Polaris Industries has declared a regular quarterly cash dividend of $0.55 per share on its common stock. The dividend will be paid on June 15, 2016, to shareholders of record at the close of business on June 1, 2016.

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

For ongoing analysis of this sector, visit Market Realist’s Consumer Discretionary page.

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