Vitaly Losev
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​Polaris Industries: not an off-road stock.

Polaris Industries Inc. designs, engineers and manufactures all terrain vehicles, snowmobiles, and motorcycles and markets them, together with related replacement parts, garments and accessories through dealers and distributors located in the United States, Canada and Europe. Polaris fuels the passin of riders around the world by delivering innovative, high quality vehicles, products and services.

1) Financial analysis

To date, at a price of $ 104 per share, Polaris is estimated at 6,7B dollars. The company has a good ratio of price to sales, which equals 14.58. This, in turn, is 79% smaller than the average P/E in the industry, and 27% less than the average sector. Also, the company has good profitability. ROI exceeds the average for the industry in more than 3 times, and more than the average for the sector more than 2 times. The ratio of equity to debt is more than satisfactory and accounts for about 26%.

The company continually demonstrates a positive trend. So, in 2014, sales rose 19% to $ 4,48B. EPS also increased significantly (by 23%) to $ 6.65 per share. Today's low share price is largely due to dissatisfaction of investors due to the report for the third quarter, but they had too high expectations to my mind.

So, the EPS for the third quarter of 2015 is more than in the same period in 2014 by 11.6%. Revenue increased by 11.8% comparable. At the same time a year earlier the share price hovered around $ 146, which is higher than the current price of 40%. Moreover, the current EPS in the first 9 months of 2015 already equals 5.09. If we assume that the ratio of earnings per share between the third and fourth quarters will be the same as last year (2.06 / 1.98 = 1.04; hence a difference of 4%), whereas in the past three months Polaris will be able to earn $ 2.2 per share as a result, the annual EPS will be 7.29. Finally, the annual growth rate of 9% is realistic. Finally, buying a growing company with no financial difficulties at a discount of 40% is definitely a good deal.

2) Market conditions

Polaris Industries Inc. today announced the acquisition of Timbersled Products, Inc.a privately held Sandpoint, Idaho-based company that is an innovator and market leader in the burgeoning snow bike industry. The company’s expertise in snowmobile suspensions inspired it to design and develop the original Timbersled Mountain Horse snow bike, the undisputed market leader in sales and performance. As a result of the company’s dominance in engineering innovation, quality and reliability, most riders refer to this fast-growing new winter sport as Timbersledding. The terms of the transaction were not disclosed.

Copenhagen-based private equity firm Polaris said it had made a binding offer to acquire all outstanding shares in Danish ferry company Mols-Linien and planned to delist the company from the stock exchange. Polaris Industries Inc., a recognized leader in the powersports industry, is proudly introducing the all-new Polaris GEM®. The new GEM has more built-in comfort and street-legal safety features than a golf cart, and is more maneuverable, cost-efficient and sustainable than a truck or van. It offers a spacious interior with a compact footprint and quiet electric power for low-cost, low maintenance operation. GEM is the market leader in the electric low-speed vehicle (LSV) industry and has sold more than 50,000 vehicles worldwide. Polaris continues to expand its market leadership by broadening its side-by-side product line-up. Today, the company is introducing the Polaris GENERAL™, the new standard in off-road versatility.

3) Technical analysis

Polaris Industries Inc.(NYSE:PII)for many years was in a continuous upward trend, and the correction is quite natural for such situation. Unfortunately, due to the continuous growth, strong levels of support did not have time to form, but Fibonacci levels can serve as resistance levels. We see that the price approached the level of $ 100 per share. It is well known that round price values are always important for the market, so the level of $ 100 is unlikely to be passed without a good fundamental reason (which is not at the moment). Moreover, according to the Stochastic paper war underestimated for several months, and is approaching the time to win back the position.

4) Conclusion

All in all, Polaris is a stable leader in the industry, as well as showing strong upward trend. Furthermore the company has a good momentum of growth in dividends (currently yield is 2%) that pleases long-term investor.

Recommendation: Buy; medium term potential is 55%.