Critical Comparison: Polaris (NYSE:PII) & Escalade (NASDAQ:ESCA)

Escalade (NASDAQ:ESCA) and Polaris (NYSE:PII) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Risk and Volatility

Escalade has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Polaris has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Earnings & Valuation

This table compares Escalade and Polaris”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Escalade	$240.16 million	1.12	$13.70 million	$1.67	11.65
Polaris	$7.15 billion	0.43	-$465.50 million	($4.63)	-11.65

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

Insider and Institutional Ownership

65.2% of Escalade shares are held by institutional investors. Comparatively, 88.1% of Polaris shares are held by institutional investors. 33.1% of Escalade shares are held by company insiders. Comparatively, 2.4% of Polaris shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Escalade pays an annual dividend of $0.61 per share and has a dividend yield of 3.1%. Polaris pays an annual dividend of $2.72 per share and has a dividend yield of 5.0%. Escalade pays out 36.5% of its earnings in the form of a dividend. Polaris pays out -58.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Polaris has raised its dividend for 30 consecutive years. Polaris is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations for Escalade and Polaris, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Escalade	0	0	1	1	3.50
Polaris	1	11	1	1	2.14

Polaris has a consensus price target of $66.67, suggesting a potential upside of 23.58%. Given Polaris’ higher possible upside, analysts plainly believe Polaris is more favorable than Escalade.

Profitability

This table compares Escalade and Polaris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Escalade	9.46%	13.11%	10.07%
Polaris	-3.50%	16.77%	2.91%

About Escalade

Escalade, Incorporated, together with its subsidiaries, manufactures, distributes, imports, and sells sporting goods in North America, Europe, and internationally. The company provides various sporting goods brands in basketball goals, archery, indoor and outdoor game recreation, and fitness products. It offers archery products under the Bear Archery, Trophy Ridge, Whisker Biscuit, Cajun Bowfishing, Karnage, SIK, BearX, and Bear Traditional brand names; table tennis products under the STIGA and Ping-Pong brands; basketball goals under the Goalrilla, Goaliath, Silverback, Hoopstar, and Goalsetter brand names; and pickleball under the Onix, DURA, and Pickleball Now brands. The company also provides play systems under the Woodplay, Jack & June, and Childlife brands; fitness products under the STEP, Lifeline, Kettleworx, Natural Fitness, USW, and PER4M brand names; safety products under the USWeight brand; hockey and soccer game tables under the Triumph Sports, Atomic, American Legend, Air Hockey, and HJ Scott brands; and billiard tables and accessories under the American Heritage Billiards, Brunswick Billiards, Gold Crown, Centennial, Cue&Case, Lucasi, Mizerak, PureX, Rage, Players, Minnesota Fats, and Mosconi brand names. In addition, it offers darting products under the Unicorn, Winmau, DMI, Prodigy, Arachnid, Accudart, and Nodor brands; water sports products under the RAVE Sports brand; and outdoor game products under the Victory Tailgate, Triumph Sports, ACL, and Zume Games brand names. The company provides its products through sporting goods retailers, specialty dealers, online retailers, direct-to-consumer, e-commerce, traditional department stores, and mass merchants. Escalade, Incorporated was founded in 1919 and is headquartered in Evansville, Indiana.

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.