Critical Survey: JAKKS Pacific (NASDAQ:JAKK) versus Polaris (NYSE:PII)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
JAKKS Pacific	2.77%	4.33%	2.42%
Polaris	-3.50%	16.77%	2.91%

Dividends

JAKKS Pacific pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. Polaris pays an annual dividend of $2.72 per share and has a dividend yield of 5.3%. JAKKS Pacific pays out 71.9% 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 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.

Earnings & Valuation

This table compares JAKKS Pacific and Polaris”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
JAKKS Pacific	$570.67 million	0.56	$9.87 million	$1.39	20.20
Polaris	$7.15 billion	0.41	-$465.50 million	($4.63)	-11.14

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

Risk and Volatility

JAKKS Pacific has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Polaris has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

44.4% of JAKKS Pacific shares are held by institutional investors. Comparatively, 88.1% of Polaris shares are held by institutional investors. 4.2% of JAKKS Pacific 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, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for JAKKS Pacific and Polaris, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
JAKKS Pacific	1	1	0	0	1.50
Polaris	1	12	1	0	2.00

Polaris has a consensus target price of $65.89, suggesting a potential upside of 27.72%. Given Polaris’ stronger consensus rating and higher possible upside, analysts clearly believe Polaris is more favorable than JAKKS Pacific.

Summary

Polaris beats JAKKS Pacific on 10 of the 16 factors compared between the two stocks.

About JAKKS Pacific

JAKKS Pacific, Inc. designs, produces, markets, sells, and distributes toys and related products, electronic products, and other consumer products worldwide. It operates through two segments, Toys/Consumer Products and Costumes. The company offers action figures and accessories, such as licensed characters; toy vehicles and accessories; dolls and accessories, including small, large, fashion, and baby dolls based on licenses, as well as infant and pre-school products; private label products; and foot-to-floor ride-on products. The company also provides role play, dress-up, pretend play, and novelty products for boys and girls based on brands and entertainment properties, as well as on its own proprietary brands; and indoor and outdoor kids' furniture, activity trays and tables, room décor, and seasonal and outdoor products. In addition, it offers Halloween and everyday costumes for various ages based on licensed and proprietary non-licensed brands, and related Halloween accessories; outdoor activity toys; junior sports toys, including hyper-charged balls, sport sets, and toy hoops; and board games. The company sells its products through in-house sales staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains, club stores, value-oriented dollar stores, toy specialty stores, and wholesalers. JAKKS Pacific, Inc. was incorporated in 1995 and is headquartered in Santa Monica, California.

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.