LCI Industries (LCII) and Polaris Industries (PII) Critical Analysis

LCI Industries (NYSE: LCII) and Polaris Industries (NYSE:PII) are both mid-cap auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.

Insider & Institutional Ownership

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

Dividends

LCI Industries pays an annual dividend of $2.20 per share and has a dividend yield of 1.7%. Polaris Industries pays an annual dividend of $2.32 per share and has a dividend yield of 1.7%. LCI Industries pays out 39.2% of its earnings in the form of a dividend. Polaris Industries pays out 73.2% 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. LCI Industries has increased its dividend for 5 consecutive years.

Analyst Ratings

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

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

LCI Industries currently has a consensus target price of $123.00, indicating a potential downside of 3.76%. Polaris Industries has a consensus target price of $99.23, indicating a potential downside of 25.78%. Given LCI Industries’ stronger consensus rating and higher probable upside, research analysts clearly believe LCI Industries is more favorable than Polaris Industries.

Profitability

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

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

Risk and Volatility

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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LCI Industries $1.68 billion 1.90 $129.67 million $5.61 22.78
Polaris Industries $4.52 billion 1.85 $212.94 million $3.17 42.18

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 11 of the 17 factors compared between the two stocks.

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.

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.

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