Polaris (NYSE:PII) Misses Q2 Revenue Estimates, Stock Drops 11.7%
Off-Road and powersports vehicle corporation Polaris (NYSE:PII) missed analysts' expectations in Q2 CY2024, with revenue down 12.3% year on year to $1.96 billion. It made a GAAP profit of $1.21 per share, down from its profit of $2.32 per share in the same quarter last year.
Is now the time to buy Polaris? Find out in our full research report.
Polaris (PII) Q2 CY2024 Highlights:
Revenue: $1.96 billion vs analyst estimates of $2.17 billion (9.8% miss)
EPS: $1.21 vs analyst expectations of $2.27 (46.7% miss)
Gross Margin (GAAP): 21.6%, down from 23.5% in the same quarter last year
Free Cash Flow of $79.1 million is up from -$177.5 million in the previous quarter
Market Capitalization: $4.64 billion
Founded in 1954, Polaris (NYSE:PII) designs and manufactures high-performance off-road vehicles, snowmobiles, and motorcycles.
Leisure Products
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Sales Growth
A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones tend to grow for years. Over the last five years, Polaris grew its sales at a weak 4.6% compounded annual growth rate. This shows it failed to expand in any major way and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Polaris's annualized revenue growth of 4.1% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.
This quarter, Polaris missed Wall Street's estimates and reported a rather uninspiring 12.3% year-on-year revenue decline, generating $1.96 billion of revenue. Looking ahead, Wall Street expects sales to grow 2.3% over the next 12 months, an acceleration from this quarter.
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Cash Is King
Read MoreIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Polaris has shown poor cash profitability over the last two years, putting it in a pinch as it gave the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin averaged 4.5%, lousy for a consumer discretionary business.
Polaris's free cash flow clocked in at $79.1 million in Q2, equivalent to a 4% margin. This quarter's margin was in line with the comparable period last year.
Key Takeaways from Polaris's Q2 Results
We struggled to find many strong positives in these results. Its revenue unfortunately missed and its EPS fell short of Wall Street's estimates. Overall, this was a mediocre quarter for Polaris. The stock traded down 11.7% to $72.50 immediately after reporting.
Polaris may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.