Has Polaris Rebounded Enough in 2025 After Its 17% Rally?

If you are eyeing Polaris stock and wondering whether it might be the right time to make a move, you are definitely not alone. It is one of those stories that keeps drawing investors back, sometimes because of its growth potential, other times for the opportunity to buy during a low. Despite a turbulent past year, with the stock down 16.2% over the last 12 months, Polaris has recently shown signs of life, rebounding by 17.0% year-to-date and notching a strong 12.1% gain in the past month. The question now is whether these moves signal a real change in the company's prospects or if they are simply a product of shifting risk perceptions and broader market optimism.

Markets tend to move on more than just headlines. The recent tailwind could be linked to an improvement in the broader outlook for consumer discretionary companies, as easing supply chain issues and consumer demand stabilization spark renewed interest. For long-term investors, Polaris still trades well below its price from three or even five years ago, which can make the stock look attractive, especially if you believe in the business fundamentals.

Of course, the real test comes from a deeper valuation check. According to our scoring system, Polaris scores a 3 out of 6 for being undervalued. That means the company stacks up favorably on half of our key measures. But is that enough to justify making a move, or could there be more layers to this story than just the numbers? Next, we will break down each valuation approach, and reveal a better way to judge whether the market is pricing Polaris properly.

Why Polaris is lagging behind its peers

Approach 1: Polaris Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to today. This model is favored for its focus on what truly matters: how much cash the business can generate over time.

For Polaris, the DCF uses two stages of free cash flow to equity projections. The company's latest twelve-month free cash flow sits at $364.3 Million. Analysts estimate that by the end of 2027, annual free cash flow will reach $244 Million. With only a handful of years covered by direct analyst predictions, Simply Wall St extrapolates projections further out and lands at $161.5 Million in free cash flow by 2035. All amounts are in US Dollars.

Based on this analysis, the DCF model calculates an intrinsic fair value of $47.65 per share for Polaris. Since the current market price is about 38.5% higher than this fair value, the indication is that the stock is overvalued according to these future cash flow projections.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Polaris.

Our Discounted Cash Flow (DCF) analysis suggests Polaris may be overvalued by 38.5%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Polaris Price vs Sales

For many businesses, especially those where profits fluctuate due to investments or economic cycles, the Price-to-Sales (P/S) ratio can offer a clearer snapshot of value than earnings-based metrics. Sales figures are harder to manipulate, and for profitable companies like Polaris, they provide a consistent reference point for comparison.

The P/S ratio is typically shaped by both growth expectations and perceived risk. In general, higher growth or lower risk supports a higher P/S multiple, while slower growth or greater uncertainty justifies a lower one. This means a "normal" or fair valuation is specific to the company and its circumstances. Benchmarking against the industry and direct peers adds perspective.

Currently, Polaris trades at 0.53x sales, which is noticeably below both the industry average of 1.02x and its peer group at 1.37x. On the surface, that would suggest the company is trading at a significant discount. However, Simply Wall St's Fair Ratio model takes this analysis further. Rather than relying solely on peer comparisons, the Fair Ratio calculates the appropriate multiple for Polaris by assessing factors such as earnings growth, margins, sector conditions, scale, and risk profile.

For Polaris, the Fair Ratio is estimated at 0.68x. This proprietary value reflects what the P/S multiple should be after accounting for company-specific details that wider benchmarks overlook. Since the actual P/S ratio (0.53x) is below this fair benchmark and the difference is greater than 0.10, this suggests Polaris stock is currently undervalued on a sales basis.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Polaris Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is an easy-to-use tool that lets you define your story about Polaris: your own assumptions for its future revenues, margins, and risks, and how you believe these will translate into a fair value for the stock.

Unlike static ratios or analyst forecasts, Narratives connect everything that matters, including what is happening in the business, what you believe will happen, and how that leads to a financial outlook and fair value. Available on Simply Wall St's Community page, Narratives are used by millions of investors to set out their perspectives and quickly see how their story compares against others and against the current share price.

Narratives are dynamic, updating as new information such as news, earnings, or regulatory changes comes in, so your view always stays relevant. For Polaris, one investor might believe new product launches and successful tariff mitigation will drive earnings, setting a fair value near the higher $70 price target. Another may be more cautious about macroeconomic risks and competition, seeing fair value closer to $29. Narratives make it simple to compare, adjust, and decide when to buy or sell with confidence.

Do you think there's more to the story for Polaris? Create your own Narrative to let the Community know!

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.

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