PII
Polaris Inc.
$67.83
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 107.0% above fair value
You pay
$67.83
Bear
$13.11
Fair
$32.77
Bull
$52.44
Bear
$13.11
-80.7%
$7.88 × 4x + net cash
Fair
$32.77
-51.7%
$7.88 × 6x + net cash
Bull
$52.44
-22.7%
$7.88 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.88)
Implied Market Multiple
8.6x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $72.00 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $32.77 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 135.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $72.00 (from 27 analysts). Our estimate is 73% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing