Polaris Industries Inc. (PII): Should You Invest in This Small Vehicle Maker?

Page 1 of 2

As an investor, you want a company that constantly seeks out new markets and products that enhance your cash flow. Motorized products maker Polaris Industries Inc. (NYSE:PII) seeks to do just that with recent acquisitions giving it added access to the European market and the reintroduction of an old iconic motorcycle brand. Looking at this company from the vantage point of strengths, weaknesses, opportunities, and threats will give you a good idea of its direction as an investment.

Polaris Industries Inc. (NYSE:PII)

Strengths

Diversity – As an owner you want a company with a variety of products with one picking up the slack in case another one fails. One of Polaris’ strengths lies in its product and geographic diversity from ATVs, motorcycles, small trucks, quadricycles, and snowmobiles. In addition, this company operates globally. Chairman and CEO Scott Wine realizes this and he has made reinforcing this strength “his personal mission” according to Polaris’ latest earnings call (sign-in required).

Manufacturing processes – Polaris Industries Inc. (NYSE:PII) utilizes efficient manufacturing methodology to reduce manufacturing and lead times to its dealers. In addition to improving return on equity, lower lead times translate into happier end consumers as this lessens the chance of them going to a competitor due to the lack of availability of their desired product.

Snowmobiles – Believe it or not, snowmobiles represented quite a strength for Polaris in its most recent quarter, with sales tripling versus the same time last year. This should raise an eyebrow at competitor Arctic Cat Inc (NASDAQ:ACAT).

Parts, garments, and accessories – Polaris’ product innovations and the acquisition of snowmobile accessory maker Klim served as catalysts for 27% growth in sales for its parts, garment, and accessories segment.

Fundamentals – Polaris Industries Inc. (NYSE:PII)’ strengths translated into good fundamentals. Its revenue increased 11% during its most recent quarter. Free cash flow turned from a negative $22 million to a positive $8 million. Polaris’ cash comprised 52% of its stockholder’s equity during its most recent quarter. Its long-term debt to equity stood at 14%.

Based on full year data, Polaris’ efficiency shows with return on equity clocking in at 45%, nearly double that of rivals Harley-Davidson, Inc. (NYSE:HOG) and Arctic Cat, which showed returns on equity of 24% and 23%, respectively.

Weaknesses

On road vehicles – On road vehicles showed the greatest weakness for Polaris, at least in its most recent quarter. Sales declined 3% due to lower motorcycle volume according to its latest earnings call.

Harley-Davidson retains the nationwide king of the motorcycles title with its largest competitor only commanding roughly 13% according to Harley-Davidson’s CFO in its most recent earnings call (sign-in required).

Opportunities

Indian motorcycles – Harley-Davidson’s market lead hasn’t dissuaded Polaris from trying to upend its market leading status. Polaris intends to reintroduce the iconic Indian brand later in 2013. While this may only make a dent in Harley-Davidson’s market share, it should prove to be a boon to Polaris’ shareholders as some consumers prefer options in the heavyweight motorcycle market. Management expects the Indian Motorcycle to contribute to a 50%-60% increase in its on road vehicle sales in 2013.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!