Polaris Industries Inc.
by Todd BuntonApril 27, 2012 | Comments : 0 Recommended this article: (0)
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This prompted analysts to revise their estimates higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).
In addition to strong growth potential, the company pays a dividend that yields a solid 1.9%.
Polaris is a leader in the powersports industry. The company manufactures off-road vehicles (ORVs), including all-terrain vehicles (ATVs) and snowmobiles, and on-road vehicles, including motorcycles and electric powered vehicles.
The company is headquartered in Medina, Minnesota and has a market cap of $5.6 billion.
First Quarter Results
Polaris delivered another impressive quarter with earnings per share coming in at 85 cents, beating the Zacks Consensus Estimate of 78 cents. This was a 27% increase over the same quarter last year.
Net sales soared 25% to $673.8 million, well ahead of the Zacks Consensus Estimate of $617.0 million. This was driven by continued strength in the North American off-road vehicle and motorcycle industries.
Gross profit expanded 60 basis points to 28.9% of sales, while operating income also improved 60 bps to 13.6%.
Following stellar Q1 results, management raised it guidance for the remainder of 2012. The company now expects 2012 EPS between $3.85 and $4.00 on sales growth of 10-13%. This is up from previous guidance of $3.65-$3.80 per share on 5-8% sales growth.
This prompted analysts to revise their estimates higher, sending the stock to a Zacks #2 Rank (Buy).
The Zacks Consensus Estimate for 2012 is now $4.06, above guidance, and representing 27% growth over 2011 EPS. The 2013 consensus estimate is currently $4.84, corresponding with 19% growth.
In addition to strong growth, Polaris offers a dividend that yields a solid 1.9%. The company has been aggressively raising this as business continues to boom, including a whopping 64% increase earlier this year.
Shares of Polaris have soared 30% since I originally wrote about it back on October 26, and are up 12% since I last wrote about it on March 30.
This has led to an increase in valuations, but they are still not unreasonable. The stock trades at 19x 12-month forward earnings, a premium to the industry median of 11x. But this seems justified given Polaris's above-average earnings growth.
The Bottom Line
With estimates still rising, strong earnings growth projected, a solid 1.9% yield and reasonable valuation, Polaris still offers investors attractive upside potential.
This Week's Growth & Income Zacks Rank Buy Stocks:
Badger Meter, Inc. (BMI) delivered strong first quarter results, prompting analysts to revise their estimates significantly higher for both 2012 and 2013. This sent the stock to a Zacks #2 Rank (Buy). Analysts believe that demand for Badger Meter's products has turned a corner, and this should drive strong growth over the next few years. In addition, the company has been steadily increasing its dividend. It currently yields a solid 1.7%. Read the full article.
Parker Hannifin Corporation (PH) delivered record quarterly earnings, with EPS coming in at $2.01, well ahead of the Zacks Consensus Estimate of $1.72. And management raised its guidance above the current consensus estimate for the remainder of its fiscal 2012. It is currently a Zacks #2 Rank (Buy). In addition, the company raised its dividend for the second consecutive quarter. It yields a solid 1.9%. Read the full article.
Estimates have been rising for WD-40 Company (WDFC) after it beat the Zacks Consensus Estimates on both the top and bottom lines, and management provided 2012 guidance above consensus. It is a Zacks #2 Rank (Buy). It also pays a dividend that yields a solid 2.7%. Read the full article.
Southwest Gas Corporation (SWX) offers investors solid growth and income at a reasonable price. And estimates have been steadily rising after the company delivered a big beat for the fourth quarter. It is a Zacks #1 Rank (Strong Buy) stock. Read the full article.
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