Is Polaris Stock a buy after pandemic, is the demand for boats and motorcycles higher?

While everyone initially crouched down during the coronavirus pandemic, unsure of how the crisis would play out, six months into the outbreak and people are more than ready to get their lives back to normal.

Loan data shows expensive purchases consumers held back at the start of COVID-19 have since picked up, and that bodes well for the powersports vehicle maker Polaris industries (NYSE: PII).

Image source: Bennington Marine. (Bennington is a Polaris company.)

Clear up priorities

The multi-lender marketplace Credible examined a representative sample of nearly 800,000 personal loan rate requests submitted to its lenders in 2020 and found that while most people act responsibly when trying to consolidate debt and refinance their credit card purchases, a growing number of people are looking to take out a loan for consumer-discretionary elements.

In fact, the two categories that saw the biggest increases in loan requests were boats and motorcycles, which saw a 355% and 257% increase in loan requests, respectively.

Purpose of the loanShare of rate requests from January 1 to March 13Share of rate requests March 14-August. 26Change before and after March 13
Boat0.07%0.34%355%
Motorbike0.21%0.74%257%
VR0.10%0.28%181%
Cosmetic procedure0.13%0.22%67%
Home improvement6.40%10.50%64%
Business2.20%3.52%60%
Important purchase8.81%13.36%52%
Baby or adoption0.20%0.29%43%
Automobile financing2.54%3.34%31%
Buying a house0.62%0.80%30%
Engagement ring0.07%0.08%15%
Moving moving3.1%3.52%14%
Credit card refinancing20.08%22.94%14%
Other6.66%7.01%5%
Green loan0.12%0.11%(3%)
Medical fees3.41%3.25%(5%)
Special occasion1.64%1.38%(16%)
Wedding0.78%0.58%(25%)
Taxes0.45%0.33%(26%)
Debt consolidation41.92%27.13%(35%)
Vacation0.48%0.28%(43%)

Data from Credible. Table by author.

While these two areas still represent a very small portion of the total loan demanded by consumers – moving and buying a car, for example, were more in demand – these two powersports activities saw the strongest. increase compared to any other category.

This bodes well for Polaris, as the motorcycle industry is in free fall and the automaker was already revamping its boat business just months after plunging into the segment. However, the real benchmark will be the type of boats and bikes they buy.

Getting out of a spin

As Harley davidson (NYSE: PORK) Knows it too well, motorcycle buyers haven’t bought the big, heavy bikes he’s known for.

The major motorcycle maker was caught in a five-year sales slump, and last quarter sales were down 53% from a year earlier, leading Harley to switch to a surprising adjusted loss of $ 0.35 per share.

While this is mostly the result of the motorcycle dealership shutdown pandemic, the bike maker hasn’t seen a single quarter of sales growth in the United States in more than four years. He ousted his CEO earlier this year and recently announced his third roadmap in one year as he tries to figure out how to navigate changing consumer preferences.

Polaris has actually done better in the motorcycle business, noting last quarter that North American consumer retail sales of its Indian Motorcycles brand had increased by a mid-teens percentage.

Boating was a different story, with segment sales falling 28% year over year. The pandemic led him to have a different view of the company less than a year after its purchase. Polaris announced that it was indeed scuttling his fishing and cruise ships in favor of pontoons and deck boats, two popular and growing segments before the pandemic.

If the boats that consumers are lending for are these types of versatile boats, then obviously Polaris will have made the right choice, but the leader in powersports will end up having that sinking feeling if he chose it wrong.

Barely move the needle

According to Credible, 27% of all consumer loan applications between March 14 and August 26 were for debt consolidation, but that figure was down 35%, compared to nearly 42% of all consumer loan applications. ready for consumption, from January 1 to March 13. Credit card refinancing represented 23% of credit applications, up 14% from the previous period.

On the other hand, as mentioned above, requests for loan of boats and motorcycles have seen a massive increase. They still represent respectively only 0.34% and 0.74% of the representative sample of requests for personal loans. That said, the gains could be an encouraging sign, although it could also mean that winter is not the best time for such vehicle sales.

Yet because Polaris Industries’ business has held up well throughout the pandemic, these consumer loan numbers could indicate that it hasn’t missed a milestone and will soon see even higher sales.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Franklin Cheatham

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