Today, Polaris Inc. has released its 10-K report. Polaris Inc. designs, engineers, manufactures, and markets powersports vehicles worldwide, operating through three segments: Off-Road, On-Road, and Marine. The company offers a wide range of vehicles and accessories, including off-road vehicles, snowmobiles, motorcycles, and boats, as well as aftermarket parts and apparel. In the latest report, Polaris Inc. reported record sales of $8.9 billion in 2023, a four percent increase from 2022. However, the net income from continuing operations attributable to Polaris Inc. decreased by 17 percent from 2022, with diluted earnings per share from continuing operations decreasing from $10.04 to $8.71 per share. Adjusted EBITDA also decreased to $1,020.9 million in 2023 compared to $1,075.9 million in 2022. Polaris Inc. announced a two percent increase in the quarterly cash dividend for the first quarter of 2024, representing the 29th consecutive year of increased dividends to shareholders. The company's shares have moved -0.2% on the market and are now trading at a price of $92.7. For further details, you can read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $6,078 | $6,782 | $6,281 | $7,439 | $8,589 | $9,049 |
| Gross Margins | 25% | 24% | 24% | 24% | 23% | 23% |
| Net Margins | 6% | 5% | 2% | 7% | 5% | 7% |
| Net Income (M) | $335 | $324 | $125 | $494 | $447 | $595 |
| Net Interest Expense (M) | $57 | $78 | $67 | $44 | $72 | $117 |
| Depreciation & Amort. (M) | $211 | $234 | $236 | $216 | $233 | $250 |
| Diluted Shares (M) | 64 | 62 | 63 | 63 | 60 | 58 |
| Earnings Per Share | $5.24 | $5.2 | $1.99 | $7.88 | $7.44 | $10.17 |
| EPS Growth | n/a | -0.76% | -61.73% | 295.98% | -5.58% | 36.69% |
| Avg. Price | $96.96 | $81.73 | $82.37 | $119.99 | $105.61 | $92.945 |
| P/E Ratio | 18.09 | 15.51 | 40.78 | 14.89 | 14.01 | 9.02 |
| Free Cash Flow (M) | $252 | $404 | $814 | $11 | $202 | $346 |
| CAPEX (M) | $225 | $251 | $204 | $283 | $307 | $425 |
| EV / EBITDA | 11.29 | 9.18 | 7.86 | 9.92 | 8.25 | 6.26 |
| Total Debt (M) | $1,929 | $1,767 | $1,507 | $2,279 | $2,544 | $1,656 |
| Net Debt / EBITDA | 2.53 | 2.24 | 1.16 | 1.91 | 2.14 | 1.28 |
| Current Ratio | 1.24 | 1.06 | 1.17 | 1.15 | 1.19 | 1.25 |
Polaris stock at $92.7 appears undervalued due to its strong growth potential and sound value factors. The company has seen a rapid revenue growth of 7.1%, and its capital expenditures are increasing at a rate of 12.2%, signaling a commitment to future expansion. The earnings per share have grown at an annualized rate of 11.7% over the last 6 years, indicating strong profitability. Additionally, the PEG ratio of 1.3 suggests that the shares are fairly valued in terms of growth potential.
However, the company's operating margins have been lower than the industry average at 8.5%, although they are showing improvement with an average yearly growth rate of 3.7%. Similarly, Polaris's gross margins of 23% are thinner than the industry average of 34.2%, pointing to potential competitivity challenges.
On the value side, the company's total liabilities exceeding its current assets is a concern. The net current asset level of -$1.34 billion and the current ratio of 1.25 highlight the imbalance between assets and liabilities. Furthermore, the disproportionately high value of inventories within the current assets raises questions about the company's liquidity management.
