Analyzing Harley-Davidson (NYSE:HOG) & Polaris (NYSE:PII)

Harley-Davidson (NYSE:HOG) and Polaris (NYSE:PII) are both mid-cap auto/tires/trucks companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

85.1% of Harley-Davidson shares are owned by institutional investors. Comparatively, 88.1% of Polaris shares are owned by institutional investors. 1.0% of Harley-Davidson shares are owned by insiders. Comparatively, 2.4% of Polaris shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Harley-Davidson and Polaris, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harley-Davidson	3	5	2	1	2.09
Polaris	1	9	1	1	2.17

Harley-Davidson currently has a consensus price target of $21.67, indicating a potential downside of 11.44%. Polaris has a consensus price target of $65.00, indicating a potential downside of 2.32%. Given Polaris’ stronger consensus rating and higher possible upside, analysts plainly believe Polaris is more favorable than Harley-Davidson.

Earnings & Valuation

This table compares Harley-Davidson and Polaris”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harley-Davidson	$4.47 billion	0.60	$338.74 million	$2.61	9.37
Polaris	$7.15 billion	0.53	-$465.50 million	($7.84)	-8.49

Harley-Davidson has higher earnings, but lower revenue than Polaris. Polaris is trading at a lower price-to-earnings ratio than Harley-Davidson, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Harley-Davidson and Polaris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harley-Davidson	8.03%	10.27%	3.15%
Polaris	-6.13%	5.91%	1.12%

Risk & Volatility

Harley-Davidson has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, Polaris has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Dividends

Harley-Davidson pays an annual dividend of $0.75 per share and has a dividend yield of 3.1%. Polaris pays an annual dividend of $2.72 per share and has a dividend yield of 4.1%. Harley-Davidson pays out 28.7% of its earnings in the form of a dividend. Polaris pays out -34.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Harley-Davidson has raised its dividend for 5 consecutive years and Polaris has raised its dividend for 30 consecutive years. Polaris is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Harley-Davidson beats Polaris on 9 of the 17 factors compared between the two stocks.

About Harley-Davidson

Harley-Davidson, Inc. manufactures and sells motorcycles in the United States and internationally. The company operates in three segments: Harley-Davidson Motor Company, LiveWire, and Harley-Davidson Financial Services. The Harley-Davidson Motor Company segment designs, manufactures, and sells motorcycles, including cruiser, trike, touring, standard, sportbike, adventure, and dual sport, as well as motorcycle parts, accessories, and apparel, as well as licenses its trademarks and related services. This segment sells its products to retail customers through a network of independent dealers, as well as e-commerce channels. The LiveWire segment sells electric motorcycles, balance bikes for kids, parts and accessories, apparel, and related parts and services. The Harley-Davidson Financial Services segment provides wholesale financing services, such as floorplan and open account financing of motorcycles, and parts and accessories; and retail financing services, such as installment lending for the purchase of new and used Harley-Davidson motorcycles, as well as point-of-sale insurance and voluntary protection products. This segment also licenses third-party financial institutions that issue credit cards bearing the Harley-Davidson brand. Harley-Davidson, Inc. was founded in 1903 and is based in Milwaukee, Wisconsin.

About Polaris

Polaris Inc. designs, engineers, manufactures, and markets powersports vehicles in the United States, Canada, and internationally. It operates through three segments: Off-Road, On-Road, and Marine. The company offers off-road vehicles (ORVs), including all-terrain vehicles and side-by-side vehicles; military and commercial ORVs; snowmobiles; motorcycles; and moto-roadsters, quadricycles, and boats. It also provides ORV accessories comprising winches, bumper/brushguards, plows, racks, wheels and tires, pull-behinds, cab systems, lighting and audio systems, cargo box accessories, tracks, and oil; snowmobile accessories, which include covers, traction products, reverse kits, electric starters, tracks, bags, windshields, oil, and lubricants; and motorcycle accessories, such as saddle bags, handlebars, backrests, exhausts, windshields, seats, oil, and various chrome accessories. In addition, the company offers light duty hauling and passenger vehicles; gear and apparel, such as helmets, goggles, jackets, gloves, boots, bibs, hats, pants, and leathers; and pontoon and deck boats. The company provides its products through dealers and distributors, and online; and retail and e-commerce marketplaces. The company was formerly known as Polaris Industries Inc. Polaris Inc. was founded in 1945 and is headquartered in Medina, Minnesota.