This Company Might Have Another ACE in the Hole

Read about Polaris's strategy behind the Sportsman ACE, along with what its research and development means for future innovation.

Jan 31, 2014 at 11:13AM

Polaris (NYSE:PII) once again proved itself to be an innovator when the leading manufacturer of off-road vehicles announced the new Sportsman ACE. The ACE off-road vehicle features a sit-in chaise which combines the handling of a Sportsman all-terrain vehicle, or ATV, with the comfort of an RZR side-by-side. While the new vehicle comes as a big announcement, evidence shows that Polaris has more innovation on the way that could separate it from competitors like Arctic Cat (NASDAQ:ACAT).

ACEs high
The Sportsman ACE's features include 10.25 inches of ground clearance and twin tube shocks which give the vehicle smooth riding suspension, a 32-horsepower ProStar electronic fuel-injected engine that matches the output of a Sportsman 500 ATV,  and a ROPS cab frame which appears on side-by-sides to improve safety. These and other specs combine to make the ACE a fun, secure off-road vehicle.

Polaris hopes that the Sportsman ACE's combination of handling, power, and comfort will draw consumers new to off-roading.

"In creating the Sportsman ACE, we wanted to not only appeal to current off-road enthusiasts, but develop a vehicle that brings new customers to off-road recreation," said vice president David Longren, "We accomplished this by coupling an easy-to-use, nimble platform with a confident and secure ride that, together, provides drivers of all experience levels a new way to experience the outdoors."

Once newbies get hooked, they can progress to other products in Polaris's successful off-road vehicle, or ORV, business. During its third quarter of 2013, the company posted a 12% revenue increase for ORVs driven by double-digit growth from the RANGER, RZR, and ATV divisions. According to COO Bennett Morgan, this marked the 17th consecutive quarter that Polaris side-by-sides and ATVs gained market share.

The Sportsman ACE offers an exciting and secure experience for consumers new to off-roading and could help drive revenue for Polaris, but the company also shows more signs of innovation.

Future possibilities
Polaris has been consistently increasing its research and development budget:

PII Research and Development Expense (Quarterly) Chart

PII Research and Development Expense (Quarterly) data by YCharts

Polaris reinvests 4% of its yearly revenue into R&D. This ensures that Polaris' R&D will grow proportionately with its revenue and explains why Polaris' R&D expenses increased at a higher pace than that of Arctic Cat. Increasing R&D expenses indicate that management is focusing on the company's long-term growth which is good for Foolish investors.

Consistent R&D investment makes it possible for Polaris to create new off-road vehicles like the Sportsman ACE as well as products for divisions like the fast-growing parts, garments, and accessories division or the historic Indian motorcycle brand. Polaris launched Indian motorcycles in 2013, and it is challenging Harley-Davidson (NYSE:HOG) in the heavyweight motorcycle division.

During 2013, Harley-Davidson released new Project Rushmore and Street bikes, showing that it wasn't going to let Polaris take its market share easily. Project Rushmore gives Harley's luxury tourers a series of upgrades, including more power and better breaking.  Street motorcycles are aimed toward younger, urban riders and are smaller and more nimble than other bikes.  These launches helped the company maintain a 54.9% market share of heavyweight motorcycles.   Challenging Harley is no easy task, but I think Polaris will continue to put plenty of R&D into producing motorcycles that capture the attention of the motorcycle community.

Polaris's secret to success
In a recent interview with Investor's Business Daily, Polaris CEO Scott Wine said that one of the company's secrets to success was, "bringing many new people into the industry." The Sportsman ACE plays into this strategy by offering a unique, easy riding experience for anyone new to off-roading. As the company continues to invest in R&D I'd expect it to continue to create innovative products for its on-road vehicle, off-road vehicle, and motorcycle businesses. 

Put your money where your mouth is
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers