Stock (Symbol) |
Polaris (PII) |
Stock Price |
$114 |
Sector |
| Retail & Travel |
Data is as of |
| November 9, 2015 |
Expected to Report |
| Jan 25 – Jan 29 |
Company Description |
 Polaris Industries Inc. (Polaris) designs, engineers and manufactures off-road vehicles (ORV), including all-terrain vehicles (ATV) and side-by-side vehicles for recreational and utility use, snowmobiles, and on-road vehicles, including motorcycles and small electric vehicles (SEV), together with the related replacement parts, garments and accessories (PG&A). These products are sold through dealers and distributors located in the United States, Canada and Europe. Source: Thomson Financial |
Sharek’s Take |
 Polaris (PII) is a diversified manufacturer of off-road vehicles, ATVs and motorcycles.The company is seeing lots of success with motorcycles as sales surged 158% last qtr but is seeing the most competition in a decade in the side-by-side ORV market. Honda and Yamaha have introduced competitive new SxS models and these may be taking sales from Polaris. SxS accounts for around half of PII’s sales and profits, and I feel the company is losing some of its dominance in this area. 60% of company sales are off-road vehicles (ORV), 15% motorcycles including the Victory and Indian brand, and just 2% snowmobiles. The company is also hurting from a strong dollar. PII stock is currently on free-fall, but this is a quality company which pays a dividend and buys back stock. Polaris is on my radar, and a further price drop would create a buying opportunity too good to pass up. |
One Year Chart |
 Stock has been in a free-fall since the Summer, and has sold off hard in each of the last 2 qtrs after it has reported earnings. Annual Profit Estimates have been declining slightly for a year now. 2015’s haven’t fallen much (from $7.53 to $7.39 the past 4 qtrs) but 2016’s have (from $8.81 to $8.31). This data was compiled a week ago when PII was $114 and it’s already dropped to $104. I’d love to buy in but feel this isn’t the bottom. |
Fair Value |
 If it weren’t for foreign exchange, Polaris would likely make $8 in profits this year, which would be 20% profit growth. But F/X is hurting a lot of companies and those stock’s aren’t ignoring this factor — they still fall. Long-term upside is excellent here, but I am concerned about the competition in the SxS market which is an unknown factor right now. |
Bottom Line |
 PII has been a solid stock the past five years, but has had times in its history where the stock hasn’t gone higher (1995-1999, 2005-2011) and that makes me cautious. Polaris is a bargain today, but may be a bigger bargain in the future. Last qtr I wanted to get PII below $115 and now with it at $104 I feel the stock is a falling knife. This is a great company with excellent management, but for now I have to pass on buying to see where the stock falls to. PII is at the top of my radar; I might buy in at anytime. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
