Polaris Industries (PII) Flagged As Strong On High Volume

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Polaris Industries ( PII) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Polaris Industries as such a stock due to the following factors:

  • PII has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $120.2 million.
  • PII has traded 185,126 shares today.
  • PII is trading at 2.23 times the normal volume for the stock at this time of day.
  • PII is trading at a new high 3.02% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on PII:

Polaris Industries Inc., together with its subsidiaries, designs, engineers, manufactures, and markets off-road vehicles, snowmobiles, motorcycles, and small vehicles primarily in the United States, Canada, Western Europe, Australia, and Mexico. The stock currently has a dividend yield of 1.5%. PII has a PE ratio of 21. Currently there are 11 analysts that rate Polaris Industries a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Polaris Industries has been 952,400 shares per day over the past 30 days. Polaris has a market cap of $9.4 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.13 and a short float of 11.9% with 8.16 days to cover. Shares are down 6.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Polaris Industries as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, increase in stock price during the past year and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • PII's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 16.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • POLARIS INDUSTRIES INC has improved earnings per share by 9.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, POLARIS INDUSTRIES INC increased its bottom line by earning $6.65 versus $5.40 in the prior year. This year, the market expects an improvement in earnings ($7.45 versus $6.65).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Leisure Equipment & Products industry average. The net income increased by 9.5% when compared to the same quarter one year prior, going from $80.90 million to $88.56 million.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Leisure Equipment & Products industry and the overall market, POLARIS INDUSTRIES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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