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Polaris Industries (PII)
:PII

Polaris (PII) AI Stock Analysis

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Polaris

(NYSE:PII)

Rating:62Neutral
Price Target:
$43.00
▲(4.04%Upside)
The overall stock score for Polaris is influenced significantly by financial performance and technical analysis. The company shows resilience with strong cash flow but faces challenges with declining profitability and revenue inconsistency. Technical indicators suggest mixed short-term momentum. Valuation concerns arise from a high P/E ratio, but a strong dividend yield offers some appeal. The earnings call underscores operational strengths but highlights significant market challenges and uncertainties.
Positive Factors
Innovation
PII highlighted new innovation that it expects to help grow its market share including an entry level priced ORV launch later this year.
Market Share
Polaris gained market share in mid-size motorcycles with the new Indian Scout Lineup.
Negative Factors
Gross Margin
The company experienced a decrease in gross margin due to higher promotional activity and unfavorable foreign exchange conditions.
Sales Decline
Polaris reported a decline in off-road, on-road, and marine sales due to lower volume and higher promotional activity.
Tariff Uncertainty
Tariff uncertainty represents an unknowable but sizeable risk factor moving forward, making it hard to recommend these shares.

Polaris (PII) vs. SPDR S&P 500 ETF (SPY)

Polaris Business Overview & Revenue Model

Company DescriptionPolaris Inc. designs, engineers, manufactures, and markets power sports vehicles worldwide. It operates through three segments: Off-Road, On-Road and Marine. The company offers off-road vehicles (ORVs), including all-terrain vehicles and side-by-side vehicles; snowmobiles and snow bikes conversion kit systems; motorcycles; and low emission, light duty hauling, passenger, and industrial vehicles. It also provides quadricycles and moto-roadsters; ORV accessories comprising winches, bumper, plows, racks, wheels and tires, pull-behinds, cab systems, lighting and audio systems, cargo box accessories, tracks, and oil; snowmobile accessories, which include covers, traction products, electric starters, reverse kits, tracks, bags, windshields, oil, and lubricants; and motorcycle accessories, such as saddle bags, handlebars, backrests, exhausts, windshields, seats, oil, and various chrome accessories. In addition, the company offers gear and apparel, such as helmets, jackets, gloves, pants, hats, goggles, boots, bibs, and leathers; and pontoon and deck boats. The company provides its products through dealers and distributors, and online; and aftermarket parts, garments, and accessories through 101 brick-and-mortar retail centers, call centers, and e-commerce sites. The company was formerly known as Polaris Industries Inc. Polaris Inc. was founded in 1954 and is headquartered in Medina, Minnesota.
How the Company Makes MoneyPolaris Inc. generates revenue through the sale of its extensive lineup of powersports vehicles, including all-terrain vehicles (ATVs), snowmobiles, side-by-side vehicles, and motorcycles. Additionally, the company earns income from its aftermarket segment, which offers parts, garments, and accessories to enhance and maintain its products. Polaris also benefits from its boat segment, which includes brands like Bennington, Godfrey, and Hurricane. The company leverages a network of independent dealers and distributors worldwide to reach its customers. Strategic partnerships and a focus on innovation in product development further bolster Polaris's revenue streams, ensuring a competitive edge in the powersports industry.

Polaris Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 24.64%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Negative
The earnings call highlighted operational efficiencies, strong performance in premium products, and market share gains in Indian Motorcycles, but was overshadowed by significant sales declines, tariff uncertainties, and elevated promotions impacting margins. The withdrawal of full-year guidance reflects the challenging environment.
Q1-2025 Updates
Positive Updates
Operational Efficiency Improvements
The operations team has made significant progress with lean and operational efficiencies, achieving the highest Q1 operating free cash flow in nine years.
Strong Performance in Premium Products
Premium products such as Polaris XPEDITION and RANGER XP North Star had positive retail sales, highlighting strength among cash buyers.
Indian Motorcycles Market Share Gain
Indian Motorcycles gained meaningful market share in North America, driven by the new PowerPlus lineup in the heavyweight portfolio.
Dealer Relationships and Feedback
Dealers report strong relationships with Polaris, appreciating the company's commitment to reducing inventory and making appropriate adjustments.
Snowmobile Business Retail Growth
Late season snow in the flatlands resulted in strong retail growth of approximately 50% in the snowmobile business for the quarter.
Negative Updates
Sales Decline
Sales were down 12% due to reduced shipments to manage dealer inventory amidst a powersports downturn and higher promotional environment.
Tariff Impact and Withdrawal of Guidance
The company withdrew its full-year guidance due to the fluidity of the tariff environment, with potential gross tariff costs of $320 million to $370 million.
North American Retail Decline
North American retail was down 7%, with high single-digit declines in utility retail and over 20% declines in RZR and used vehicles.
Elevated Promotions Impacting Margins
Margins were slightly below expectations due to elevated promotions in the industry, impacting overall profitability.
International Sales Decline
International business dropped 16% due to weak markets in Off-Road and On-Road, with weak market conditions expected to continue.
Company Guidance
During the Polaris First Quarter 2025 Earnings Call, the company highlighted a challenging environment with a 12% decline in sales due to reduced shipments to manage dealer inventory amid a downturn in powersports. North American retail was down 7%, with utility business performing better than recreational products. Adjusted EPS was negative $0.90, at the midpoint of earlier guidance. The company's strategic mitigation of tariff impacts involved operational savings and deferring costs, yet led to the withdrawal of full year guidance due to tariff uncertainties. The tariff impact is anticipated to be less than $225 million after mitigation, with sourcing shifts reducing Chinese components by 30%. Despite these challenges, the company emphasized a commitment to innovation and dealer partnerships, aiming for long-term shareholder value through improved operations and product offerings.

Polaris Financial Statement Overview

Summary
Polaris faces challenges with declining profitability and inconsistent revenue, impacting its income statement. The balance sheet indicates stable equity but increased leverage, raising concerns. Strong operating cash flow is a positive aspect, although free cash flow remains inconsistent. Overall, the company demonstrates resilience but faces profitability and growth challenges.
Income Statement
62
Positive
Polaris has shown fluctuating revenues, with a notable decline in both EBIT and net income over the TTM period. The gross profit margin is healthy, yet the net profit margin is low due to decreased net income. Revenue growth has been inconsistent, indicating potential market challenges.
Balance Sheet
68
Positive
The company's debt-to-equity ratio has increased slightly, indicating higher leverage, which could pose risks. However, the equity ratio remains stable, reflecting a decent balance between the company's assets and liabilities. Return on equity is low, impacted by declining net income.
Cash Flow
75
Positive
Operating cash flow is strong, showing improvement over previous periods. However, free cash flow growth is volatile, with a significant drop in the TTM period. The operating cash flow to net income ratio is high, suggesting strong cash conversion.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
6.97B7.18B8.93B8.59B8.20B7.03B
Gross Profit
1.36B1.47B1.96B1.96B1.94B1.71B
EBIT
194.60M290.60M700.90M804.50M709.00M587.30M
EBITDA
501.00M290.60M1.01B1.07B881.20M462.70M
Net Income Common Stockholders
40.20M110.80M502.80M603.40M493.90M124.80M
Balance SheetCash, Cash Equivalents and Short-Term Investments
291.70M287.80M367.80M324.50M509.20M634.70M
Total Assets
5.45B5.53B5.52B5.22B5.05B4.63B
Total Debt
2.18B2.20B2.05B2.17B1.97B1.58B
Net Debt
1.89B1.91B1.69B1.84B1.46B943.00M
Total Liabilities
4.22B4.23B4.10B4.12B3.82B3.49B
Stockholders Equity
1.23B1.29B1.42B1.10B1.22B1.14B
Cash FlowFree Cash Flow
168.90M6.50M513.20M202.00M-4.60M804.70M
Operating Cash Flow
456.80M268.20M925.80M508.60M293.70M1.02B
Investing Cash Flow
-242.50M-270.90M-462.00M-324.60M-303.90M-150.70M
Financing Cash Flow
-231.80M-59.20M-431.30M-363.20M-107.60M-415.40M

Polaris Technical Analysis

Technical Analysis Sentiment
Positive
Last Price41.33
Price Trends
50DMA
36.62
Positive
100DMA
40.22
Positive
200DMA
54.15
Negative
Market Momentum
MACD
1.26
Negative
RSI
58.86
Neutral
STOCH
52.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PII, the sentiment is Positive. The current price of 41.33 is above the 20-day moving average (MA) of 39.99, above the 50-day MA of 36.62, and below the 200-day MA of 54.15, indicating a neutral trend. The MACD of 1.26 indicates Negative momentum. The RSI at 58.86 is Neutral, neither overbought nor oversold. The STOCH value of 52.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PII.

Polaris Risk Analysis

Polaris disclosed 26 risk factors in its most recent earnings report. Polaris reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Polaris Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$2.28B14.8111.44%5.22%1.04%65.90%
THTHO
73
Outperform
$4.70B21.185.42%2.27%-6.41%-15.85%
HOHOG
68
Neutral
$2.96B9.1010.84%2.98%-17.15%-40.76%
BCBC
67
Neutral
$3.75B47.045.16%3.09%-15.42%-77.50%
62
Neutral
$6.88B11.072.77%4.28%2.67%-24.94%
PIPII
62
Neutral
$2.32B58.143.09%6.48%-17.86%-89.55%
WGWGO
62
Neutral
$897.65M-0.45%4.31%-12.29%-105.55%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PII
Polaris
40.05
-34.05
-45.95%
BC
Brunswick
57.06
-14.82
-20.62%
LCII
LCI Industries
90.46
-6.30
-6.51%
HOG
Harley-Davidson
23.44
-9.76
-29.40%
THO
Thor Industries
88.26
-2.38
-2.63%
WGO
Winnebago Industries
31.46
-23.30
-42.55%

Polaris Corporate Events

Executive/Board Changes
Polaris Announces Leadership Changes with Eastman’s Retirement
Neutral
Nov 22, 2024

Polaris Inc. will see a leadership change as Stephen L. Eastman, the President of Parts, Garments, and Accessories, plans to retire at the end of 2024. Following his retirement announcement, Eastman’s roles will be redistributed among other company leaders starting January 2025, while he transitions to a strategic advisory role until December 2025, maintaining his current compensation.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.