Polaris Earnings Bounce Back. What Supply-Chain Troubles?

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Polaris makes motorcycles, snowmobiles, and all-terrain vehicles.

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Courtesy Polaris

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Power sports equipment maker Polaris reported second-quarter earnings that have investors breathing a sigh of relief. Shares are higher in early trading.

Polaris (ticker: PII) reported second-quarter earnings of $2.42 a share from $2.1 billion in sales. Wall Street was looking for $2.10 a share from $2.2 billion in sales.

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Polaris stock is up about 3.5% in premarket trading at $117 a share. S&P 500 and Dow Jones Industrial Average futures are down 0.5% and 0.4%, respectively.

The results are a relief for investors because of the first-quarter earnings “print.” In April, Polaris reported EPS of $1.29 a share when Wall Street was modeling $1.77 a share. Polaris stock dropped almost 8% in response.

Supply-chain issues were blamed. Management said that a lack of parts was constraining vehicle shipments.

Sales still trailed Street estimates. All the supply-chain issues are completely cleared up. But profit margins bounced back. Operating profit margin came in at about 9.4%, up from the less than 5% reported in the first quarter of 2021.

“Our results during the second quarter reflect our team’s commitment to our customers through industry-leading innovation and exceptional execution, despite the ongoing supply-chain constraints impacting the global economy,” said CEO Mike Speetzen, adding Polaris still sees strong demand along with improving supply chains.

Coming into this earnings report, the first-quarter “miss” was the only miss out of the past five quarters. Still, Polaris stock fell each of the five times better-than-expected earnings were reported. Guidance cuts or increases don’t look responsible for that trading action. Investors simply seem to “sell the news” when Polaris reports numbers.

Options markets imply the stock will move about 6%, up or down, following earnings.

Looking ahead, Polaris expects to earn about $10.20 in 2022. That is a slight change from prior guidance but only reflects the sale of a business, according to the news release.

Coming into Tuesday trading, Polaris stock is up about 3% year to date.

Write to Al Root at [email protected]

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Credit: www.marketwatch.com /

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