Polaris vs. Arctic Cat
GEORGE MURRAY
General Manager | Chief Operating Officer | Operational Strategy, Collaborative Leadership | Award-winning & 5X Author | Army Veteran
When you decide to look at a company, a good way to start one's due diligence process might be to go to its website, to get an initial overview.
As you look at the Polaris website, it states that it's become synonymous with adventure and passion and both work and play. As I try to verify that statement, it appears that it is trying to diversify itself over a broad range of products, not only targeting consumers for their discretionary leisure money, but also businesses. Polaris started in 1954 and has now has products ranging from all-terrain vehicles, people movers and motorcycles to ultra-light tactical vehicles, just to name a few. This past year, their stock has been as high of $104.25 and as a low of $67.80 per share.
In an article from September 2016, Polaris had to restate their earnings forecast downward by 43%, shortly after reports of vehicle fires appeared. The number of recalls for Polaris vehicles is unfortunately up, and with the recent recalls of Indian motorcycles in December 2016, it doesn't seem that this systemic problem is going to be fixed anytime soon.
The company’s leadership receives a high rating of 70% on glassdoor.com , and the feedback from their employees is overwhelmingly positive. However, with most of its jobs open beyond 30 days like quality and engineering positions be only a coincident or a direct reflection on the recent recalls?
Now taking a look at Arctic Cat's website, it appears that their target market is the enthusiasts of the great outdoors. Which would make you believe that it may be limiting its marketing focus to just individual consumers and their discretionary leisure budgets. Founded in 1960 Arctic Cat is the manufacturer of snowmobiles and all-terrain vehicles. This past year, the stock has been as high as $19.82 and as low as $8.90, per share.
In an article from August 2016, Arctic Cat reported that it started to move into a new headquarters after a $27 million Dollar renovation to its facilities that is now almost completed. But it too had its own quality issues, dating back to October 2014, when it had to recall 40,000 all-terrain vehicles, due to possible parts failures. The company has new products coming out in 2017 to compete with Polaris. The company also has a good rating on glassdoor.com with a lot of positive feedback from employees. However there is no direct feedback on the leadership. It too has its share of challenges, because recent winters have been unusually mild; at the same time foreign currencies have weakened vs. the US dollar, making exports more difficult. So is Arctic Cat ready to wrest market share from its competitors? Or is the fact that a large proportion of its sales come from Canada still going to hinder its growth?
In closing, these are both great companies, each having its share of distinct, individual challenges. Both have great opportunities. Each has to ask its respective leadership and employees some fundamental questions. How do we get better? What is better? What is the distance between good versus great? How long will it take us to get there? And at what cost? Both companies still manufacture in the US, and with my military background, that kind of loyalty still has a special place in my heart. However domestic manufacturing comes with its own challenges. Mainly, how do we stay competitive, while providing a quality product on time, every time, in the face of global competition?
What are your thoughts? Polaris or Arctic Cat? Why?
Owner Bow Creek Farm & Cattle Co
8 年Enjoyed reading your thoughts on Polaris and ACAT. I own and use products manufactured by both companies for both work and recreation. I’ve also expected that ACAT would be acquired for some time. However, I was hoping and expecting a different suitor. As I have a different underlying belief for ACAT’s failure to keep up with Polaris. Within my region, Polaris beat ACAT on their dealer network. Without having strong knowledgeable independent dealers to represent their ATV products, ACAT wasn’t able to generate the necessary cult like following that would create demand and command a premium for their products. By relying heavily on Bass Pro, ACAT reduced their product to a commodity. Within ACAT’s industry, the only way to remain an icon and pioneer is to have a strong independent dealer network. Professionals, whether they are in the construction, snow removal, farming or ranching industries simply will not purchase from a box store without certainty of support after the sale. Even the most avid hunters and anglers will certainly go to someone who specializes in these products rather than working through a maze of bureaucracy to get their ATV serviced or repaired. A great example of a company that has avoided becoming a commodity is Stihl. It’s very unusual to see Stihl product sold where their isn’t experts on hand to address concerns and issues immediately. Professionals and discriminating buyers will pay extra and go out of their way to acquire product that provides service and support after the sale. As best I can see, Stihl is in no danger of being dethroned as the go to for professionals. The key to success in any business, don’t let yourself become a commodity! Textron is sure to keep Arctic Cat products at a disadvantage through their identical method of retail and sketchy service and support after the sale at best. Furthermore, when was the last time a friend or neighbor told you they were buying a Textron? This brings me to the perfect suitor for ACAT. Harley-Davidson has the dealer network in place and needs to grow. Based on recent earnings and sales, it’s obvious HOG needs to branch out of the upscale motorcycle segment. This was and is the perfect acquisition for HOG. By placing ACAT product within HOG’s existing dealer network, buyers who never considered ACAT product would have immediately been drawn to the brand. I own ACAT snowmobiles and I’ve always wanted their ATVs, I just couldn’t bring myself to purchase this caliber of product from a box store. By having HOG’s dealers provide ACAT’s products would have delivered a new level of consumer confidence in the Arctic Cat brand. The purchase would have opened great opportunity in the defense industry for HOG as well. Acquisition of ACAT by HOG would have been the perfect fit for both companies, the workers. communities and the shareholder’s. HOG is the only suitor who will return Arctic Cat to greatness and solidify this brand’s status in the power and outdoor industry. It is my belief, an all stock purchase for the same value by HOG would have delivered a much higher return than the small cash premium by Textron via the growth in HOG’s market cap in just a few short years. It is not too late for HOG to reach out to ACAT. It’s my understanding the ACAT can back out for just $7.4 million. Certainly there are people that will disagree with this perspective, I just don’t see how HOG entering this foray could possibly be negative for either company.
Global Project Management, Cloud Strategist, Client Advocacy, Player/Coach, Sales and Operations Enablement, Non-Profit Board and advisory. Digital Nomad
8 年Polaris is much more diversified, having me believe they are able to sustain year round markets. While it's 0 degrees in COS today, the winter sports vehicles are selling well. In ~4 months when winter subsides and warmer days begin, their spring/summer vehicles will begin to sell well while winter inventory slows. Arctic Cat - strong company but too niche for the economic swings we've seen and will continue to see. IMHO
Driving Growth Through Impactful Marketing and Business Development
8 年Polaris does a much better job, or at least is much more active, in terms of marketing and advertising than Arctic Cat does. Polaris, as a brand, also seems to have done a better job of moving with the times. Arctic Cat still feels like just a snowmobile company to me - a perception that is also reinforced by the company's name...