What Happened?
Shares of off-Road and powersports vehicle corporation Polaris (NYSE:PII) fell 8.3% in the morning session after the company reported underwhelming fourth-quarter results. Polaris exceeded analysts' revenue expectations, but it is worrisome that sales declined over 20% year-on-year. Management cited "lower volume due to planned reductions in shipments as we actively managed dealer inventory in a subdued retail environment." EBITDA also missed. Looking ahead, the company guided to meaningful declines in EPS in 2025 compared to 2024, missing expectations. Overall, this quarter was weak.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Polaris? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Polaris’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 11.2% on the news that the company reported weak third-quarter earnings results that fell below analysts' EPS and revenue estimates. Management called out a challenging consumer confidence and retail environment. Moving on, guidance reflected the weak trends observed by the business. FY'2024 sales are expected to decline approximately 20 percent year on year (vs. the previous guidance for a 17 to 20 percent y/y decline). Similarly, adjusted diluted EPS is expected to fall approximately 65 percent year on year (versus the prior outlook of a 56 to 62 percent decline). Overall, this was a softer quarter.
Polaris is down 7.5% since the beginning of the year, and at $52.17 per share, it is trading 47.9% below its 52-week high of $100.12 from March 2024. Investors who bought $1,000 worth of Polaris’s shares 5 years ago would now be looking at an investment worth $542.25.
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