Harley-Davidson Versus Polaris Stock.

Stock market analysts are daily piling up numbers about the companies they follow. From P/E ratios (dividing the company’s share price by its earnings per share EPS), to free cash flow (FCF) to net income variations (margin ranges) to consistency of past earnings and cash flow, to 5-year trailing and 5-year estimated future growth, etc. The only thing I know for sure is that most of them have upgraded both Harley-Davidson (HOG) and Polaris (PII) from “market perform” to “outperform”.

Most of you don’t follow analysts’ coverage of these 2 stocks, but it is interesting for all of you commenting on each company’s line-up, unit sales and reorganization to see how the share price of each company has evolved during the last 12 months versus the S&P 500 (capitalization-weighted index of the prices of 500 large-cap stocks actively traded in the USA.)

As you can see both stocks beat the index (the market) by a very wide margin, especially Polaris. Motorcycle manufacturers’s stocks still a terrific investment for years to come?

12 Responses to “Harley-Davidson Versus Polaris Stock.”

  1. 1 Gerry Apr 17th, 2011 at 10:12 am

    For those who don’t know Cyril is Wall Street very knowledgable…

  2. 2 Richard Apr 17th, 2011 at 6:24 pm

    Does the data represent polasis as a whole or just the motorcycle branch of the company? If it represents polaris as a whole (snowmobiles, watercraft etc.) it’s not good comparative data and therefore not meaningful.

  3. 3 Jason Apr 18th, 2011 at 8:02 am

    Richard…I agree to a point, but isn’t it fair to rate the stock on a whole? Think about it this way; HD sells millions of dollars a year in apparel, so do these numbers represent the apparel branch of the company or just the motorcycles? They certainly do. It is all relative from an investors point of view. There are those out there that believe that HD is not a motorcycle manufacturer…they are a lifestyle company that sells motorcycles. From an investor’s point of view you want to make certain that the individuals that are driving the ship are prudent in their decisions to broaden the horizons of your capital (since that is what they are using to stay in business) and spend your dollars in the manner that provides the maximum return on your investment. So does this mean that Polaris is “out performing” HD in motorcycle sales? Not likely but it shows that the people on the board and the managers are doing their jobs for the investors.

  4. 4 Hark Apr 18th, 2011 at 8:25 am

    Great information. Even though I ride a Harley….have owned HOG Stock…I have to hand it to Victory for the tremendous job they are doing. Victory is a great looking bike these days.

  5. 5 Richard Apr 18th, 2011 at 10:10 am

    Good points all. In the context of the post, you are of course correct. What I was looking for was to make a direct comparison of the motorcycle side of Polaris to Harley (including the parts, accessories, clothing etc.), to get a feel as to how polaris runs motorcycle business as compared to Harley. I don’t get those who may not consider Harley a “motorcycle manufacturer”…. I think that would be equivalent to trying to argue that the sun does not rise in the east.

  6. 6 jonesy Apr 18th, 2011 at 12:07 pm

    The only problem I have with this discussion is that I don’t see anyone acknowledging issues of scale. Victory might as well be building bikes in a garage and selling them on ebay compared to Harley. Harley will ship something like 225,000 motorcycles this year and that is down from a peak of around 400,000 a few years ago. Victory might sell 10,000 or something like that. They might be a great company with a great product but they are still a very small fish in the motorcycle ocean.

  7. 7 Mike H Apr 18th, 2011 at 12:34 pm

    I would agree that it is hard to compare head to head as Polaris is a very multi-dimensioned company. According to their 2010 annual report, only 4% of their sales were for on road vehicles with 69% being from off road. The rest being snowmobiles and other recreational products. That being said it is good to see another American motorcycle company compete which is good for all of us, no matter which brand you prefer. Directly comparing HD stock to Polaris is Apples to Oranges. I like that Victory aligns with builders like Ness and Roland, always thought Harley should do that on a specialty bike. Would have loved to see HD do a collaboration with Roland on a cafe sporty.

  8. 8 Quik C. Apr 18th, 2011 at 3:43 pm

    Should Harley Davidson still be considered an American USA built motorcycle, since 98% of their parts come from overseas???

  9. 9 Brett Apr 18th, 2011 at 4:49 pm

    I would say no you can’t compare both as a whole. Much like Honda, Polaris has many other products & their snowmobiles & ATVs are what has put the company on the map & has made them the money to allow them to venture into the motorcycle business. I would say if Polaris or Honda only ever just had motorcycles…nothing else, from day 1, there is a good chance they would have gone the way of Big Dog.

  10. 10 Dj Apr 18th, 2011 at 7:27 pm

    I hate the factory…but apparently my hipocrisy knows no bounds since I own many, many hundreds of shares in hd. So keep buying your t-shirts and your trinkets.

  11. 11 Richard Apr 19th, 2011 at 2:11 pm

    Quick C. 98%???? Where did you get that figure? To my understanding brakes, electrics, and suspension part mostly fall in that category. Engine, tranny, frame, fiberglass and body componets etc. are mostly American. Could you post your source please? If I’m incorrect about this, I would be willing to learn….I think the best way to understand this nuance is to state the “% of American content”. It would then include the cost of all parts and assembly labor etc. I would be really surprized if Harley and Polaris were very far apart in that regard as there are a limited number of qualified suppliers out there to pick from. I do know that a Toyota Camery has more American content than most “American” cars….More than many popular automobile models such as Ford Mustang for one example. I think BOTH companies deserve our support as they both build a quality product and I suspect BOTH have much more American content that any of the Asian or European motorcycle builders.

  12. 12 Patrick Jansen Apr 19th, 2011 at 5:18 pm

    I just heard a rumor that Polaris has purchased Indian. Any truth to it.

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Cyril Huze