Polaris Inc. (NYSE:PII) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$2.0b were what the analysts expected, Polaris surprised by delivering a (statutory) profit of US$2.66 per share, an impressive 27% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Polaris' 15 analysts are now forecasting revenues of US$7.23b in 2021. This would be a notable 8.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 1,712% to US$7.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.12b and earnings per share (EPS) of US$6.90 in 2021. So the consensus seems to have become somewhat more optimistic on Polaris' earnings potential following these results.
There's been no major changes to the consensus price target of US$114, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Polaris at US$128 per share, while the most bearish prices it at US$98.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Polaris is an easy business to forecast or the the analysts are all using similar assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Polaris'historical trends, as next year's 8.0% revenue growth is roughly in line with 9.1% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 15% per year. So although Polaris is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Polaris following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Polaris going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 5 warning signs for Polaris that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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