Polaris Industries Inc. (PII): This Recreational Vehicle Company Looks Good

The company has built a strong brand around its off road vehicles, but Polaris is not without competition. Arctic Cat Inc (NASDAQ:ACAT) is a key player in the ATV and snowmobile market.

The company earns roughly 54% of its revenue from snowmobile sales and 32% from ATV sales. The remaining comes from parts and accessories.

Arctic Cat is much smaller than Polaris, having a market cap of only $578 million, roughly a tenth of Polaris’ valuation. Snowmobile sales were on the rise the last year due to increased volume in Canada and other international markets. The company is already in the process of launching its new 2014 line of snowmobiles in preparation for the fall and winter sales cycle.

Its new line of snowmobiles is expected to bring a lot of new growth for the company, domestically and internationally. It is bringing back a popular brand of snowmobiles called the ZR. Wall Street analysts are predicting an earnings growth rate of 60% or more for Arctic Cat next year as it expands its product line and international volume.

What’s next for Polaris?

Polaris is attempting to take on Harley-Davidson with its re-branding of the classic Indian Motorcycle. This is a heavy undertaking that will likely not bring a lot of success. Harley-Davidson has too strong of a brand in the U.S. and abroad. Still, its motorcycle division has some promise. Arctic Cat is expected to grow substantially in the future but it is still too small to take on Polaris Industries Inc. (NYSE:PII).

Polaris also recently purchased a French auto manufacturing company called Aixam. The company plans on building a $1 billion electric vehicle business in the next five years. Polaris has already dominated the ATV market and has a bold plan to take on motorcycles. With electric vehicles thrown into the mix, Polaris is shaping up to be a very interesting company for investors to watch.

The article This Recreational Vehicle Company Looks Good originally appeared on Fool.com.

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