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  (Toby Talbot/AP)


(Toby Talbot/AP)

Research Report

Polaris Industries: A stock that Buffett and Lynch would like Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

Minnesota-based Polaris Industries makes off-road vehicles (including all-terrain and side-by-side vehicles and snowmobiles) and on-road vehicles (including motorcycles and small electric vehicles). Its market cap is $9.4-billion (U.S.)

Polaris has grown EPS at a 30-per-cent pace over the long term (using the average of the three-, four-, and five-year EPS growth rates), impressing the Peter Lynch-based model.

It has grown sales at an 18-per-cent pace over the long term (using the average of the three-, four-, and five-year sales growth rates)

The stock may seem pricey at 26.8 times trailing 12-month EPS, but its strong growth makes for a solid 0.88 P/E-to-growth ratio, which the Lynch model likes.

Polaris has averaged a return on equity of 40.3 per cent over the past decade, part of why it gets strong interest from the Warren Buffett-based model.

It has a solid 80 relative strength over past year, and has increased EPS in all but two years of the past decade, which the Buffett model likes.

Profit margins are more than double the industry average (10 per cent vs 4 per cent) and debt is low - about 12 percent of equity and less than 1/3 of annual earnings - which the Lynch and Buffett models like.

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