Polaris Inc. PII is slated to release first-quarter 2021 results on Apr 27, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.54 a share and $1.84 billion, respectively.
The Minnesota-based manufacturer of motorcycles and off-road vehicles reported better-than-expected earnings on the back of higher-than-anticipated sales across each of its segments. Over the trailing four quarters, the company surpassed estimates on three occasions and missed on the other, with the average surprise being 25.6%. This is depicted in the graph below:
Polaris Inc. Price and EPS Surprise
Investors predict an earnings beat for Polaris this time around as well. Reassuringly, our model also indicates the same.
Trend in Estimate Revisions
The Zacks Consensus Estimate for Polaris’ first-quarter earnings per share has been revised upward by a penny in the past 30 days. The bottom-line projection calls for a massive improvement from the year-ago earnings of 22 cents a share. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year improvement of 31%.
Our proven model predicts an earnings beat for Polaris this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.
Earnings ESP: The company has an Earnings ESP of +4.12%. This is because the Most Accurate Estimate for loss is pegged 6 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Polaris currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors at Play
Sustained demand growth across the powersports industry and outdoor recreation is expected to buoy Polaris’ results this earnings season. Innovative product line-up of off-road vehicles (ORV), snowmobiles and boats along with rising demand across the PG&A (parts, garments and accessories) business and Aftermarket unit will likely reflect positively on the firm’s first-quarter 2021 results.
The ORV/Snowmobiles unit, which forms a major chunk of the company’s total revenues, is anticipated to have generated robust sales amid strong retail demand and favorable product mix. During the quarter, Polaris took the trail riding game a notch higher with the launch of RZR Trail and Trail S lineup. The Zacks Consensus Estimate for ORV/Snowmobiles revenues is pegged at $1,136 million, indicating 37.8% year-over-year growth.
The consensus mark for revenues from the Boats segment is pegged at $207 million, suggesting an increase from the comparable year-ago period’s $155 million, primarily driven by stronger volumes aided by the strength of Bennington, Godfrey and Hurricane brands. Revenue estimates for the Motorcycles unit is pegged at $176 million, suggesting an improvement from $127 million recorded in the year-ago quarter. High demand for Polaris Slingshot® Grand Touring LE and Indian Challenger is anticipated to have boosted the Motorcycles unit’s sales.
Revenue estimates for the company’s Global Adjacent Markets and Aftermarket segments are pegged at $127 million and $219 million, implying a year-over-year uptick of 40.8% and 8.4%, respectively. Polaris’ fully-owned Jeep and four-wheel-drive truck aftermarket parts and accessories retailer, Transamerican Auto Parts is likely to have buoyed sales in the aftermarket segment.
On a further encouraging note, the company approved a 2% dividend hike during the to-be-reported quarter, marking its 26th straight year of payout increase.
Other Stocks to Consider
Here are a few other auto stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:
LKQ Corp. LKQ has an Earnings ESP of +0.18% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on Apr 29.
Cummins CMI has an Earnings ESP of +0.90% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on May 4.
IAA Inc. IAA has an Earnings ESP of +5.60% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on May 4.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.