On the surface it seems curious that despite an increasingly positive outlook for its motorcycles and off-road vehicles, the stock of Polaris Industries (NYSE:PII) has barely budged in 2014.

PII Chart

PII data by YCharts.

Even though its primary ORV segment is still enjoying double-digit growth, the reintroduction of the Indian nameplate has injected a bit of vigor to the discussion of its motorcycles, and its parts and accessories division is still showing smart growth, the stock is up less than 3%. What's up with that? 
 
Photos
 The Indian Scout out on the trail. Source: Indian Motorcycles
 
In reality, Polaris' stock is doing as well as its business, but the former was dealt a setback at the start of the year after the latter produced a fourth-quarter earnings hiccup. That caused the stock to tumble 17% over the course of January and February, only to reverse course and begin a rally that, when viewed from trough to peak, is actually 23% higher.
 
Although Polaris has a somewhat diversified product lineup, it remains focused largely on off-road vehicles, which account for over two-thirds of its revenues. It generates more from parts and accessories than it does from motorcycles, and while that might explain why it's doing better than Harley-Davidson, whose motorcycle-centric stock is down 5% year to date, it really doesn't explain why Arctic Cat (NASDAQ:ACAT), which derives 44% of its revenues from ATV sales and 39% from snowmobiles (from which Polaris gets less than 1% of its revenues), is seeing its stock crater some 34% so far in 2014. 
 
 Screen Shot

Data source: Polaris Industries' Q2 SEC filing.

For that we should probably look to the fact that Polaris has a strong presence in Europe, where ATVs generated $170 million in sales last quarter, or more than 10 times the amount generated by Arctic Cat, whose sales fell 23% from the year-ago period.
 
Moreover, Polaris has grown its sales more profitably than its rival, far outpacing it across the board.
 
Screen Shot

Data source: SEC quarterly filings.

As the industry leader, Polaris is benefiting from the improving economy here at home, where unemployment, though still at elevated levels, is better than it has been in some time. Honda Motors, which itself saw the number of units sold in its motorcycle and ATV segment increase 10% last year, sees a better jobs picture and income levels.
 
Polaris will see motorcycle sales assume a growing percentage of its revenue base, with the Indian brand now joining its portfolio. Sales last quarter more than doubled year over year, driven largely by Indian sales, while its Victory brand saw sales fall at mid-digit rates due to a product recall, even though it saw market share gains in April and June.
 
Analysts expect revenues to grow 17% this year and profits to widen 22%, which is in line with management expectations for the year, though the back half will see more pressure from currency effects, particularly from Canada, because that's when the company ships most of its snowmobiles up north.
 
In short, although Polaris Industries got off on the wrong foot for the year, it quickly gained traction and has made a point of motoring higher. A stock chart might not reveal the strength of its business, but a closer look at the gears that turn the motor makes it clear this recreational motor vehicle maker is shifting into high gear and investors can expect to see its problems recede in the rearview mirror.
 

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of 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.