Reviewing Polaris Industries (PII) & LCI Industries (LCII)

Polaris Industries (NYSE: PII) and LCI Industries (NYSE:LCII) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Insider and Institutional Ownership

91.1% of Polaris Industries shares are held by institutional investors. Comparatively, 99.6% of LCI Industries shares are held by institutional investors. 2.2% of Polaris Industries shares are held by insiders. Comparatively, 3.6% of LCI Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Polaris Industries has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, LCI Industries has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.

Dividends

Polaris Industries pays an annual dividend of $2.32 per share and has a dividend yield of 1.8%. LCI Industries pays an annual dividend of $2.20 per share and has a dividend yield of 1.7%. Polaris Industries pays out 73.2% of its earnings in the form of a dividend. LCI Industries pays out 39.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Polaris Industries has raised its dividend for 5 consecutive years. Polaris Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Polaris Industries and LCI Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Polaris Industries 3.90% 33.81% 9.35%
LCI Industries 7.07% 23.60% 16.10%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Polaris Industries and LCI Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Polaris Industries 2 12 2 0 2.00
LCI Industries 1 0 3 0 2.50

Polaris Industries presently has a consensus target price of $99.23, indicating a potential downside of 21.41%. LCI Industries has a consensus target price of $123.00, indicating a potential downside of 2.96%. Given LCI Industries’ stronger consensus rating and higher probable upside, analysts plainly believe LCI Industries is more favorable than Polaris Industries.

Earnings and Valuation

This table compares Polaris Industries and LCI Industries’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Polaris Industries $4.52 billion 1.75 $212.94 million $3.17 39.83
LCI Industries $1.68 billion 1.88 $129.67 million $5.61 22.59

Polaris Industries has higher revenue and earnings than LCI Industries. LCI Industries is trading at a lower price-to-earnings ratio than Polaris Industries, indicating that it is currently the more affordable of the two stocks.

Summary

LCI Industries beats Polaris Industries on 10 of the 17 factors compared between the two stocks.

About Polaris Industries

Polaris Industries Inc. designs, engineers and manufactures powersports vehicles, which include Off-Road Vehicles (ORV), including All-Terrain Vehicles (ATV) and side-by-side vehicles for recreational and utility use; Snowmobiles, Motorcycles and Global Adjacent Markets vehicles, including Work and Transportation and military vehicles. The Company’s segments include ORV/Snowmobiles, Motorcycles, Global Adjacent Markets, and Other. Its ORVs includes the RZR sport side-by-side, the RANGER utility side-by-side, the GENERAL crossover side-by-side, the Sportsman ATV and the Polaris ACE. It produces a range of snowmobiles consisting of approximately 40 models. It offers a range of motorcycles under Indian motorcycles and Slingshot brands. The Global Adjacent Markets vehicles include low emission vehicles, light duty hauling, passenger vehicles and industrial vehicles. The Other segment includes business of TAP Automotive Holdings, LLC, a manufacturer of off-road Jeep and truck accessories.

About LCI Industries

LCI Industries, formerly Drew Industries Incorporated, through its subsidiary, Lippert Components, Inc. and its subsidiaries (LCI), supplies an array of components for the original equipment manufacturers (OEMs) of recreational vehicles (RVs) and adjacent industries. The Company’s segments include OEM Segment and Aftermarket Segment. The OEM Segment manufactures or distributes an array of components for the OEMs of RVs and adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; manufactured homes; modular housing, and mobile office units. The Aftermarket Segment supplies components to the related aftermarket channels of the RV and adjacent industries, primarily to retail dealers, wholesale distributors and service centers. The Aftermarket Segment also includes the sale of replacement glass and awnings to fulfill insurance claims.

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