Polaris Inc. (NYSE: PII)

Sector: Consumer Cyclical Industry: Recreational Vehicles CIK: 0000931015
Market Cap 3.76 Bn
P/B 4.53
P/E -8.07
P/S 0.53
ROIC (Qtr) -11.29
Div Yield % 4.06
Rev 1y % (Qtr) 9.49
Total Debt (Qtr) 1.54 Bn
Debt/Equity (Qtr) 1.86
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About

Polaris Inc., a Delaware corporation known by its ticker symbol PII, is a prominent player in the global powersports industry. The company's main business activities involve designing, engineering, manufacturing, and marketing innovative products for outdoor enthusiasts and consumers. Polaris' operations span across three segments: Off Road, On Road, and Marine, and its products are sold in nearly 90 countries worldwide. The Off Road segment is the company's primary revenue generator, accounting for approximately 60% of its total revenue. This...

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Investment thesis

Bull case

  • Strong operating cash flow of 741M provides robust 0.48x coverage of total debt 1.54B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 138M provide 3.97x coverage of short-term debt 34.80M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 741M provides exceptional 1058.57x coverage of minority interest expenses 700000, showing strong core operations.
  • Robust free cash flow of 558.10M exceeds capital expenditure of 182.90M by 3.05x, indicating strong organic growth funding capability.
  • Operating cash flow of 741M provides strong 12.37x coverage of stock compensation 59.90M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 741M barely covers its investment activities of (139.50M), with a coverage ratio of -5.31, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 138M against inventory of 1.41B, the 0.10 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (139.50M) provide weak support for R&D spending of 371.90M, which is -0.38x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 741M provides thin coverage of dividend payments of (150.30M) with a -4.93 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 741M provides minimal -10.91x coverage of tax expenses of (67.90M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Recreational Vehicles
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 THO Thor Industries Inc 6.02 Bn 23.47 1.31 0.98 Bn
2 BC Brunswick Corp 5.79 Bn -42.13 1.08 2.25 Bn
3 HOG Harley-Davidson, Inc. 4.54 Bn 6.22 0.77 5.21 Bn
4 LCII Lci Industries 3.86 Bn 29.02 1.80 1.20 Bn
5 PII Polaris Inc. 3.76 Bn -8.07 0.53 1.54 Bn
6 WGO Winnebago Industries Inc 1.38 Bn 106.02 0.46 0.58 Bn
7 MBUU Malibu Boats, Inc. 0.62 Bn 43.18 0.76 0.02 Bn
8 MCFT MasterCraft Boat Holdings, Inc. 0.38 Bn 24.66 1.30 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.05 0.70
EV to Cash from Ops. EV/CFO 6.96 6.55
EV to Debt EV to Debt 3.35 3.14
EV to EBIT EV/EBIT -12.82 -18.45
EV to EBITDA EV/EBITDA -82.87 10.49
EV to Free Cash Flow [EV/FCF] EV/FCF 9.24 12.72
EV to Market Cap EV to Market Cap 1.37 -21.47
EV to Revenue EV/Rev 0.72 0.65
Price to Book Value [P/B] P/B 4.53 1.89
Price to Earnings [P/E] P/E -8.07 18.23
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -3.10 0.48
Dividend Payout Ratio % Div Payout % (Qtr) -32.80 17.83
Dividend per Basic Share Div per Share (Qtr) 2.68 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 27.32 20.02
Interest Coverage Int. cover (Qtr) -3.06 11.87
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 30.11 55.44
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -52.05 -6.35
Dividend Growth (1y) % Div 1y % (Qtr) 1.52 -1.69
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -260.26 21.79
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -110.78 2.46
EBIT Growth (1y) % EBIT 1y % (Qtr) -244.92 80.41
EBT Growth (1y) % EBT 1y % (Qtr) -479.91 119.88
EPS Growth (1y) % EPS 1y % (Qtr) -517.35 23.97
FCF Growth (1y) % FCF 1y % (Qtr) 8,486.15 548.19
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -6.69 93.02
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.46 0.93
Cash Payout Ratio Cash Payout (Qtr) 0.16 0.15
Cash Ratio Cash Ratio (Qtr) 0.06 0.54
Current Ratio Curr Ratio (Qtr) 0.98 2.54
Debt to Equity Ratio Debt/Equity (Qtr) 1.86 1.02
Interest Cover Ratio Int Coverage (Qtr) -3.06 11.87
Times Interest Earned Times Interest Earned (Qtr) -3.06 11.87
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -1.60 -5.77
EBIT Margin % EBIT Margin % (Qtr) -5.62 -12.97
EBT Margin % EBT Margin % (Qtr) -7.46 -10.90
Gross Margin % Gross Margin % (Qtr) 19.10 21.59
Net Profit Margin % Net Margin % (Qtr) -6.50 -11.85