What’s the Latest News from Polaris Industries?

Polaris Industries (PII) has a market cap of $5.6 billion. It fell 2.2% to close at $85.84 per share on December 9, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.9%, 3.7%, and 2.4%, respectively, on the same day.

PII is currently trading 1.6% below its 20-day moving average, 6.3% above its 50-day moving average, and 0.29% below its 200-day moving average.

The VanEck Vectors Morningstar Wide Moat Research ETF (MOAT) invests 2.7% of its holdings in Polaris. The YTD price movement of MOAT was 24.1% on December 9.

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

• Harley-Davidson (HOG): $10.9 billion
• Thor Industries (THO): $5.6 billion
• Brunswick Industries (BC): $5.0 billion

In a press release on December 9, 2016, Polaris Industries reported, “Polaris Industries is pleased to announce the 2017 Slingshot SLR will be put into action when some of the world’s greatest drivers assemble for the Race Of Champions (ROC) on Jan. 21 – 22, 2017 inside Marlins Park, in Miami, Fla. The Slingshot SLR is the most premium model in the three-wheel roadster’s lineup – featuring lightweight forged aluminum wheels, a 305MM-wide rear tire, Sparco cockpit components and a custom two-tone paint scheme. The vehicle embodies on-road exhilaration and is sure to impress both drivers and fans watching in Miami next month, where the race units will be primed and ready to take to the track.”

Polaris Industries (PII) reported 3Q16 sales of ~$1.2 billion, which is a fall of 18.5% from ~$1.5 billion in 3Q15. Sales from its Global Adjacent Markets segment rose 6.4%, while sales from the Off-Road Vehicles/Snowmobiles and Motorcycles segments fell 22.6% and 2.9%, respectively, on a YoY (year-over-year) basis.

The company’s gross profit margin and operating margin fell 655 basis points and 1,190 basis points, respectively, YoY in 3Q16. The falling margins resulted from higher warranty and promotional costs and unfavorable product mix, which were offset by a fall in commodity and product costs.

The company’s operating margin fell due to a rise in general and administrative and research and development expenses for the revalidation of its product and ongoing innovation.

Its net income and EPS (earnings per share) fell to $32.3 million and $0.50, respectively, in 3Q16, compared to $155.2 million and $2.30, respectively, in 3Q15.

Polaris’s cash and cash equivalents fell 45.5%, while inventories rose 12.1% in 3Q16 YoY. Its current ratio fell to 1.2x, and its debt-to-equity ratio rose to 1.7x in 3Q16 compared to 1.4x and 1.4x, respectively, in 3Q15.

Polaris Industries (PII) has revised the following projections for fiscal 2016:

• It expects sales growth to fall to the mid to high single digits. It also expects Off-Road Vehicles/Snowmobiles sales to fall to the high single or low double digits.
• It expects its Motorcycle segment sales to rise to low single digits and its Global Adjacent Market sales to rise to high single digits.
• It expects EPS of $3.40–$3.60, which excludes the Transamerican Auto Parts acquisition.

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