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Polaris' 2014 Earnings: Nothing Short Of Excellent

Jan. 28, 2015 7:43 AM ETPolaris Inc. (PII)13 Comments
William Bias profile picture
William Bias


  • Polaris’ culture of innovation served as a catalyst for robust fundamental expansion.
  • Polaris saw special strength in its off-road, motorcycle, and parts, garments, and accessories segments in 2014.
  • Polaris’ dividend is rock solid.

On Jan. 27, off road vehicle, ATV, mini vehicle and motorcycle maker and marketer Polaris (NYSE: NYSE:PII) came out with its 2014 earnings announcement. The company's fundamentals were actually excellent in addition to beating the Wall Street expectations game. Let's take a look to see how the company performed in 2014.

Excellent revenue and profitability gains

Last year Polaris saw its revenue, net income, and free cash flow increase 19%, 20%, and 35% respectively year-over-year. Off-road vehicles, motorcycles and its parts, garments & accessories segment had the most influence on Polaris's revenue expansion contributing 55%, 18% and 19% to the overall top line gains (see table below).

Polaris sales components

Years Ended 12/31/14

Years Ended 12/31/13


% of Overall Gain

YOY Gain

Off-road vehicles


















Small Vehicles






Parts, Garments & Accessories






Total Sales






Source: Polaris's earnings announcement

One of the things I like about this company is its philosophy of innovation. Innovation is core to Polaris' corporate philosophy which is necessary in order to maintain consumer interest. The company added over 400 new accessories and two new Indian and one Victory model to its motorcycle product line. Excellent customer reception of the Indian Motorcycle has encouraged increased distribution of the product among dealers with a total of 175 dealers signed to sell the product in the future vs. the 118 already selling the product.

Polaris' lean cost control philosophy as well as leverage from its revenue gains served as foundations for its net income and free cash flow gains. Capital expenditures declined 19%, also contributing to year-over-year free cash flow gains.

Good balance sheet

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (13)

William Bias profile picture
I think its always risky to invest in consumer cyclicals when things are hot.
taplinger profile picture
Common sense says any stock price rise as high and fast as Polaris can't continue, but now I'm not so sure. Talk about aggressive leadership, the ink isn't dry on the introduction of the Indian Dark Horse and now they're buying the Chinese company Hammerhead, which has distribution centers in Shanghai and Dallas. Hammerhead makes nifty-looking go-karts and the Shanghai plant is near the already existing Polaris plant. The Dark Horse caught my attention because normally I don't like big cruisers or blacked-out appearance treatments or matte-finished paint but the Dark Horse is so appealing it would be my first choice for a cross-country trip.
Not too excited about the Hammerhead deal but must have something to do with gaining access to China markets. I hope I never see a Hammerhead go-kart with a Polaris sticker on it. More exciting is a new 600,000 sqft plant in Huntsville Alabama. The Dark Horse isn't bad either..
Hi William,

Don't you think a Price/Book Value of 12.5, a little higher than that of its industry, leaves you with a higher risk than other companies?

Looking forward to see your view on this...

Thank you!
* a little higher than *double* that
28 Jan. 2015
No worries about VICTORY bikes - they are a great motorcycle - I believe that the INDIAN brand is good for VIC. People already new that Polaris built VIC's. I ride a 2014 INDIAN Cheiftan and love it,but EVERYBODY that asks me a million different questions about the bike most do not know that Polaris is the parent company - it brings great awareness to the brand.Keepin' the INDIAN and soon trading in the old H/D for a new VICTORY! GREAT AMERICAN RIDE!!
William Bias profile picture
Thanks for the insight user5!
taplinger profile picture
Went long PII based on their products and CEO rather than from their numbers - fortunately I did that on a dip and not in the 50s. That could be a foolish way to invest but I'm a motorcyclist, I got 2 test rides on 2 Indian Chief models at the mid-Ohio Vintage M/C Rally last July. The bikes were excellent, the support staff couldn't have been more helpful. A month later Indian came out with the Scout. I ride a Harley Sportster, the Scout's direct competitor, and the Scout is technically better in every aspect. Then Polaris came out with the Slingshot which Mr. Bias unfortunately failed to mention. As a prospective buyer, I believe the Slingshot beats Bombardier's Can-Am Spyder hands down, not to mention the Spyder beats every trike. The Spyder is OK for riders that need 3 wheels whereas the Slingshot is about as much fun as you can have with your pants on. Combine the Slingshot intro with an increase in consumer spending and I'm hoping they fly off the shelf and make PII and me rich. Another reason I went long PII is because the CEO, in a video, stated that a foundation of Polaris is that he promises innovation and then delivers on his promise. As a motorcycle enthusiast I can say he's kept his word.
taplinger- what do you think they should do with Victory?

For those worried about forex, international sales ran about 16% for the year.
William Bias profile picture
Hi Taplinger,

Yeah I forgot to mention the Slingshot. Saw it in the presentation slides. I'm not a motorcycle enthusiast and I didn't mention it because I have never rode one. But I'm glad you gave your perspective as an actual consumer and agree with me on the innovation aspect of the company. I may buy some shares at some point myself. I have been watching this company for the past two years and watched it's stock price grow and grow.

I appreciate your readership!

William Bias profile picture
Thanks for your readership user1416.
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