- Price
- $53.38
- Fair value
- $73.00
- Discount
- 26.9%
- Uncertainty
- High
- LSEG rating
- 2.78
- Moat
- Wide
- Next earnings
- 2026-10-27
- Next earnings is estimate
- No
- Company name
- Polaris
- Sector
- Powersports vehicles & boats
- About
- Polaris is the largest maker of powersports vehicles, based in Minnesota. It makes off-road vehicles (RANGER, RZR and Polaris XPEDITION), snowmobiles, the Slingshot, military and commercial vehicles, Bennington and other pontoon boats, and Aixam and Goupil small vehicles in Europe. It also sells parts, garments and accessories (PG&A), which give higher margins. Polaris makes money from the sale of these products to a network of independent dealers, which then sell them to consumers, often with financing. North America gave 87% of sales in Q2 2026. In February 2026, Polaris sold a majority interest in its Indian Motorcycle business. Mike Speetzen is the CEO.
- Thesis
- The market prices Polaris as a debt-heavy maker of products that people buy only when they feel rich and credit is cheap. Powersports demand is weak, dealers use promotions, and the 10-year Treasury yield rose near 5% in September 2026, which makes vehicle loans more expensive. The strong Q2 2026 result did not change this view. Of the $1.97 of adjusted EPS, $0.96 came from a one-time refund of tariffs that the Supreme Court found illegal in February 2026. Other tariffs still raise costs. Debt rose to $1.95 billion at June 30, 2026, and the lenders' covenant relief, which allowed leverage up to 5.5 times, ended with the June 2026 quarter. For the gap to close, the business must earn more without the refund, and the checks are clear. Retail sales of off-road vehicles must stay flat or grow, as management expects for the second half of 2026. Polaris must reach its 2026 guidance of $7.30 billion to $7.50 billion in sales and $3.00 to $3.10 of adjusted EPS. It must meet the normal covenants (leverage of 3.5 times or less) from Q3 2026 and pay down the $460 million revolving loan with second-half cash flow. Dealer inventory must stay healthy without deeper promotions. The first evidence comes with the Q3 2026 report on October 27, 2026, and the 2027 guidance comes in late January 2027. Because demand depends on interest rates and consumer confidence, which Polaris does not control, the gap can close only slowly, over two to three years. A recession or higher rates would delay it.
- Risks
- Demand for off-road vehicles, snowmobiles and boats depends on consumer confidence and the cost of credit. The 10-year Treasury yield rose near 5% in September 2026. Promotions in the industry continue, and a recession could cut sales and margins fast.
Debt was $1.95 billion at June 30, 2026, and debt was 70% of total capital. The covenant relief that allowed leverage up to 5.5 times ended with the June 2026 quarter, and the normal limit is 3.5 times. Weak earnings could leave little room under the covenants and limit buybacks.
Tariffs other than the IEEPA tariffs still apply and raise costs for parts that Polaris imports. The $74 million refund in Q2 2026 is one-time, and further refunds of about $40 million are not certain.
Snowmobile sales depend on snow. A winter with little snow lowers retail sales and leaves dealers with more stock.
- Balance sheet
- Cash: $302M
Debt: $2.0B
Net debt: $1.6B
Interest cover: 1.7×
Undrawn credit line: $940M, to December 2029
Debt due within 12 months: $35M
Last debt due: 2031
Polaris funds itself with an unsecured credit facility and senior notes. At June 30, 2026, debt was $500 million of 6.95% notes due March 2029, $500 million of 5.60% notes due March 2031, a $462.5 million term loan and $459.8 million drawn on the $1.4 billion revolving loan facility, both due December 2029, and $44 million of other items. Debt is the carrying value of all financing obligations. Borrowings rose from $1.54 billion at December 31, 2025, mostly because Polaris drew $425 million on the revolving loan in the first half, as it usually does for seasonal working capital. Interest cover is GAAP operating income divided by interest expense for the first half of 2026; it is low because Q1 2026 had an operating loss. The covenants again require interest cover of at least 3.0 times and leverage of at most 3.5 times adjusted EBITDA from Q3 2026, after a relief period that ended on June 30, 2026. Polaris was in compliance at June 30, 2026. During the relief period, the lenders limited buybacks, and Polaris bought back no stock in the first half of 2026. It paid dividends of $1.36 per share in the first half.
As of 2026-06-30.
- Checkpoints
- Oct 27, 2026: Q3 2026 results: retail demand, margins and covenants. Pending. Watch: Off-road vehicle retail sales flat or higher, 2026 guidance kept, and leverage within the normal 3.5 times covenant pass; lower retail sales, a guidance cut or a new covenant waiver fails.
Jan 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: Adjusted EPS of $3.00 to $3.10 for 2026, a smaller revolving loan balance at year end, and 2027 guidance with growth without tariff refunds pass; lower 2027 guidance or higher debt fails.
- Recent events
- 2026-09-18: UBS cut its price target on Polaris to $61 from $67 and kept a Neutral rating. It pointed to continued promotions in powersports. The stock fell about 3% that afternoon.
2026-07-28: Polaris reported Q2 2026 sales of $2.02 billion, up 9%, and adjusted EPS of $1.97. A refund of $74 million of IEEPA tariffs added $0.96 to adjusted EPS. North America off-road vehicle retail sales grew 5%, ahead of the industry. Polaris raised its 2026 guidance to sales of $7.30 billion to $7.50 billion and adjusted EPS of $3.00 to $3.10, from $1.60 to $1.70. About $40 million of possible further tariff refunds is not in the guidance. The stock fell about 2% to 4% that day.
2026-06-22: Polaris appointed Dustin Semach, the CEO of Sealed Air, to its board, effective June 19, 2026. He joined the audit and compensation committees.
2026-06-15: Polaris paid a quarterly dividend of $0.68 per share, up from $0.67 a year earlier.
2026-04-30: At the annual meeting, shareholders elected the Class II directors and approved 4.58 million more shares for the company's equity incentive plan.
2026-04-28: Polaris reported Q1 2026 sales of $1.66 billion, up 8%, a GAAP loss of $0.83 per share and adjusted EPS of $0.13. It kept its 2026 guidance of $7.15 billion to $7.30 billion in sales and $1.60 to $1.70 of adjusted EPS. On February 2, 2026, it had completed the sale of a majority interest in Indian Motorcycle.