Critical Comparison: Polaris (NYSE:PII) versus Sturm, Ruger & Company, Inc. (NYSE:RGR)

Sturm, Ruger & Company, Inc. (NYSE:RGR) and Polaris (NYSE:PII) are both consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares Sturm, Ruger & Company, Inc. and Polaris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sturm, Ruger & Company, Inc.	2.11%	6.58%	5.35%
Polaris	-3.50%	16.77%	2.91%

Risk and Volatility

Sturm, Ruger & Company, Inc. has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500. Comparatively, Polaris has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Valuation and Earnings

This table compares Sturm, Ruger & Company, Inc. and Polaris”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sturm, Ruger & Company, Inc.	$546.06 million	1.27	-$4.39 million	$0.75	57.79
Polaris	$7.15 billion	0.41	-$465.50 million	($4.63)	-11.16

Sturm, Ruger & Company, Inc. has higher earnings, but lower revenue than Polaris. Polaris is trading at a lower price-to-earnings ratio than Sturm, Ruger & Company, Inc., indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

64.0% of Sturm, Ruger & Company, Inc. shares are owned by institutional investors. Comparatively, 88.1% of Polaris shares are owned by institutional investors. 4.6% of Sturm, Ruger & Company, Inc. shares are owned by insiders. Comparatively, 2.4% of Polaris shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Sturm, Ruger & Company, Inc. pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Polaris pays an annual dividend of $2.72 per share and has a dividend yield of 5.3%. Sturm, Ruger & Company, Inc. pays out 112.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Polaris pays out -58.7% of its earnings in the form of a dividend. Polaris has raised its dividend for 30 consecutive years. Polaris is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Sturm, Ruger & Company, Inc. and Polaris, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sturm, Ruger & Company, Inc.	0	2	1	0	2.33
Polaris	1	12	1	0	2.00

Sturm, Ruger & Company, Inc. currently has a consensus price target of $46.00, suggesting a potential upside of 6.13%. Polaris has a consensus price target of $65.89, suggesting a potential upside of 27.50%. Given Polaris’ higher possible upside, analysts clearly believe Polaris is more favorable than Sturm, Ruger & Company, Inc..

About Sturm, Ruger & Company, Inc.

Sturm, Ruger & Co., Inc. engages in the business of designing, manufacturing, and selling firearms to domestic customers. It operates through the Firearms and Castings segments. The Firearms segment focuses on manufacturing and selling rifles, pistols, and revolvers principally to a number of federally licensed, independent wholesale distributors. The Castings segment offers steel investment castings and metal injection molding parts. The company was founded by William B. Ruger in 1949 and is headquartered in Southport, CT.

About Polaris

Polaris Inc. designs, engineers, manufactures, and markets powersports vehicles in the United States, Canada, and internationally. It operates through three segments: Off-Road, On-Road, and Marine. The company offers off-road vehicles (ORVs), including all-terrain vehicles and side-by-side vehicles; military and commercial ORVs; snowmobiles; motorcycles; and moto-roadsters, quadricycles, and boats. It also provides ORV accessories comprising winches, bumper/brushguards, plows, racks, wheels and tires, pull-behinds, cab systems, lighting and audio systems, cargo box accessories, tracks, and oil; snowmobile accessories, which include covers, traction products, reverse kits, electric starters, tracks, bags, windshields, oil, and lubricants; and motorcycle accessories, such as saddle bags, handlebars, backrests, exhausts, windshields, seats, oil, and various chrome accessories. In addition, the company offers light duty hauling and passenger vehicles; gear and apparel, such as helmets, goggles, jackets, gloves, boots, bibs, hats, pants, and leathers; and pontoon and deck boats. The company provides its products through dealers and distributors, and online; and retail and e-commerce marketplaces. The company was formerly known as Polaris Industries Inc. Polaris Inc. was founded in 1945 and is headquartered in Medina, Minnesota.