Personal Finance

Does Polaris Industries Really Need to Be Making This Acquisition Now?

Jeep Off Road Orv Forest Girl Driving Vehicle Getty
Jeep Off Road Orv Forest Girl Driving Vehicle Getty

Image source: Getty Images.

Its acquisition's markets are slowing

Where Fiat Chrysler (NYSE: FCAU) reported Jeep brand sales were up 12% in August, led by surging growth with Cherokee sales that were 41% higher for the month, brand sales tumbled to a 3% decline in September, though the Patriot and Grand Cherokee sales were up significantly for the period.

Year to date, Jeep sales are up 12% compared to 2015, but the situation is deteriorating. Ford (NYSE: F) says sales of its top F-series trucks were down 3% in September, following a 6% drop in August and 1% decline in July.

So, as complementary as the TAP acquisition appears, it's just a bad time to make the purchase. Polaris has heaps of problems to deal with from a safety perspective, its bread-and-butter ORV market that accounted for 57% of quarterly sales is declining and giving no indication it's going to improve, and the markets that its buyout target sells to are also slowing dramatically.

There could be a time and place for Polaris Industries to buy this company, and sometimes you have to strike while the iron is hot, but that does not appear to be the case for Transamerican Auto Parts and investors need to carefully watch whether the deal ends up distracting management and causing a hit to performance.

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Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Ford and Polaris Industries. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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