Shares of ATV- and motorcycle-maker Polaris (NYSE:PII) jumped 10% out of the gate this morning and are holding on to most of those gains as we pass noonday. In 1:35 p.m. EDT trading, Polaris shares are still up a healthy 7.7% in response to a significantly better than expected second-quarter earnings report.
Heading into earnings day, analysts had forecast that Polaris would earn $0.63 per share (pro forma) on sales of $1.4 billion. In fact, Polaris earned more than twice that -- $1.30 per share -- and on sales of $1.5 billion.
That's not to say the news was all good. Despite "beating" estimates for the quarter, Polaris's Q2 2020 sales declined 15% year over year. And despite claiming an "adjusted" profit of $1.30 per share, the company's net loss as calculated according to generally accepted accounting principles (GAAP) was a crushing $3.82 per share.
Sales declined across the board, from snowmobiles and off-road vehicles and aftermarket parts (all down 9% year over year) to motorcycle and boat sales (both down 285) to "global adjacent markets," where sales plummeted 36%.
Nevertheless, the really good news is that things seem to be stabilizing already. Polaris's guidance for the rest of this year is for sales to end up roughly flat (breakeven to down 2%) for the year versus last year, at $6.650 billion to $6.750 billion. Profits-wise, adjusted net income is believed likely to rise at least 1% and perhaps as much as 4% -- ranging from $6.40 to $6.60 per diluted share.
In addition to the obvious earnings "beat," it's probably this guidance that is really moving the stock higher today.