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PII – Market expectations are for Uniform ROA to compress, but management is confident about their efficiency, accessories segment, and cash flows

June 10, 2021

  • Polaris Inc. (PII:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 13.6x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their operating efficiency, vehicle accessories segment, and cash flow from operations
  • Specifically, management is confident they beat expectations again this quarter, that new customer data is promising in terms of retail outlook, and that their EV offerings will include Optimus Ride’s full stack of sensors and software. In addition, they are confident upcoming capacity additions will help them manage and digest large demand volume, that they have become more operationally efficient, and that they plan to improve their dealer inventory levels. Furthermore, they are confident their customers are accessorizing their vehicles after buying them, that the combination of new vehicle and chassis designs will increase product power, and that they were able to provide positive cash flow from operations