Earnings Miss: Polaris Inc. Missed EPS By 47% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for Polaris Inc. (NYSE:PII), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with US$2.0b revenue coming in 9.8% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$1.21 missed the mark badly, arriving some 47% below what was expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Polaris

Taking into account the latest results, the 18 analysts covering Polaris provided consensus estimates of US$7.50b revenue in 2024, which would reflect a not inconsiderable 9.9% decline over the past 12 months. Statutory earnings per share are expected to crater 37% to US$3.71 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$8.33b and earnings per share (EPS) of US$7.26 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.1% to US$89.60. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Polaris at US$120 per share, while the most bearish prices it at US$70.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 19% by the end of 2024. This indicates a significant reduction from annual growth of 7.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Polaris is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Polaris. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Polaris analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Polaris , and understanding them should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com