How Polaris Industries, Inc. Pulled Off Another Record Quarter

Shares of Polaris Industries revved up 4% after the company announced better-than-expected first-quarter results on Thursday. And I can't blame the market for its optimism: Keeping in mind last quarter's equally bright performance, this marks Polaris' sixth-consecutive quarterly beat.

First-quarter revenue climbed 16% year over year, to $1.033 billion -- a new company record -- including North American retail sales growth of 8%. Operating income climbed 19%, to $150.3 million, and net income rose 9%, to $88.6 million, or $1.30 per diluted share. As Polaris CEO Scott Wine noted in today's press release, this marks the company's 22nd consecutive quarter of record earnings performance.

Despite that propensity for overachieving, analysts were still only anticipating earnings of $1.27 per share on sales of exactly $1 billion.

Polaris isn't slowing down yetWine elaborated: "We outperformed the market again in most of our businesses in spite of increased competitive promotional pressures, weakening global markets and the corresponding negative effect from currencies. While we are justifiably proud of these accomplishments, we remain focused on seizing the numerous opportunities we missed to perform better."

Specifically, Wine singled out high factory inventories, and "ongoing production inefficiencies, particularly in motorcycles [...]." But as Polaris continues to take steps to correct these issues, he believes it should enable even more pronounced outperformance.

Digging deeperIn the meantime, let's look at what drove Polaris' most recent results. Sales of off-road vehicles remained at the company's core, increasing 11% year over year, to $645.4 million. Revenue from the parts, garments, and accessories segment continued to climb, up 12%, to $170.6 million. Next, the "global adjacent markets" segment -- which includes the government/military group and Work & Transportation (W&T) -- rose 7%, to $65.4 million.

Arguably most impressive were sales of Polaris motorcycles, where revenue skyrocketed 74% over the same year-ago period, to $137.4 million. For that, investors can thank increases from all three of Polaris' Victory, Indian Motorcycle, and Slingshot brands. That included a nearly 40% collective jump in retail demand for Victory and Indian Motorcycles, the latter of which showed particular strength.

Slingshot retail sales were also ahead of expectations. This occurred despite a 12%declinein sales of Polaris motorcycles outside of North America due to the strengthening dollar.

Meanwhile, the much smaller Snowmobile segment was the only one to see falling sales, with revenue down 7% year over year, to $14.5 million. But Q1 is also seasonally the slowest for this segment.

Polaris also pointed out its North American retail snowmobile sales were up in the "high-single digits percent" for the full 2014-2015 season. That's above the mid-single-digit increase enjoyed by the industry as a whole, indicating Polaris took market share here. However, similar to motorcycles' performance, snowmobile sales fell 12% outside of North America amid currency headwinds.

Looking aheadFinally, for the full year 2015, Polaris narrowed its guidance, and now sees earnings per share in the range of $7.27 to $7.42 -- compared to the previous range of $7.22 to $7.42 -- an increase of 9% to 12% over 2014. Full year 2015 revenue is also expected to climb 9% to 12% -- or to a range of $4.88 billion to $5.02 billion-- which is unchanged from the original range. In this case, Wall Street was modeling higher 2015 earnings of $7.43 per share on sales of $5 billion.

It's no surprise investors are willing to forgive Polaris' slight full-year guidance miss in light of its continued quarterly dominance. Relative to its growth, shares of Polaris might not look particularly cheap trading around 22 times last year's earnings, and nearly 17 times next year's estimates. But in the end, I still think that's a reasonable premium to pay for shares of such a high-quality company.

The article How Polaris Industries, Inc. Pulled Off Another Record Quarter originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries. The Motley Fool 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.