Analyzing Sturm, Ruger & Company, Inc. (NYSE:RGR) and Polaris (NYSE:PII)

Polaris (NYSE:PII) and Sturm, Ruger & Company, Inc. (NYSE:RGR) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Risk & Volatility

Polaris has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Sturm, Ruger & Company, Inc. has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Polaris and Sturm, Ruger & Company, Inc., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Polaris	1	12	1	0	2.00
Sturm, Ruger & Company, Inc.	0	2	1	0	2.33

Polaris presently has a consensus price target of $65.89, suggesting a potential upside of 28.85%. Sturm, Ruger & Company, Inc. has a consensus price target of $46.00, suggesting a potential upside of 4.78%. Given Polaris’ higher possible upside, equities research analysts plainly believe Polaris is more favorable than Sturm, Ruger & Company, Inc..

Earnings and Valuation

This table compares Polaris and Sturm, Ruger & Company, Inc.”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Polaris	$7.15 billion	0.41	-$465.50 million	($4.63)	-11.04
Sturm, Ruger & Company, Inc.	$577.24 million	1.22	-$4.39 million	$0.75	58.53

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

Profitability

This table compares Polaris and Sturm, Ruger & Company, Inc.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Polaris	-3.50%	16.77%	2.91%
Sturm, Ruger & Company, Inc.	2.11%	6.58%	5.35%

Dividends

Polaris pays an annual dividend of $2.72 per share and has a dividend yield of 5.3%. Sturm, Ruger & Company, Inc. pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Polaris pays out -58.7% of its earnings in the form of a dividend. Sturm, Ruger & Company, Inc. pays out 112.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Polaris has increased its dividend for 30 consecutive years. Polaris is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

88.1% of Polaris shares are owned by institutional investors. Comparatively, 64.0% of Sturm, Ruger & Company, Inc. shares are owned by institutional investors. 2.4% of Polaris shares are owned by company insiders. Comparatively, 4.6% of Sturm, Ruger & Company, Inc. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

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.

About Sturm, Ruger & Company, Inc.

Sturm, Ruger & Co., Inc. engages in the business of designing, manufacturing, and selling firearms to domestic customers. It operates through the Firearms and Castings segments. The Firearms segment focuses on manufacturing and selling rifles, pistols, and revolvers principally to a number of federally licensed, independent wholesale distributors. The Castings segment offers steel investment castings and metal injection molding parts. The company was founded by William B. Ruger in 1949 and is headquartered in Southport, CT.