Polaris Industries' stock has been a powerful performer the last two years, up more than 150 percent in that time. But the last few weeks have shown that even Polaris' popular all-terrain vehicles and motorcycles can't outrun broader economic trends.

The Medina-based manufacturer reported Thursday that its first-quarter profits rose 32 percent, but Polaris' stock continued to lose ground. The stock closed Thursday at $59.67 per share, down $3.73 or almost 6 percent for the day. Just a few weeks ago, shares hit an all-time high of $74.18.

A number of factors likely contributed to the decline, analysts said, even though Polaris notched its 28th consecutive quarter of increased sales and earnings per share Thursday. The company noted a mild rise in inventories for its ATVs and a larger one for its line of snowmobiles. The dearth of snow this winter in the Upper Midwest hurt sales, CEO Tom Tiller told analysts in a conference call Thursday.

The company also wasn't helped when one of its competitors in the industry cut its profit forecast this week. Harley-Davidson shares fell 20 percent over the last two days after the company blamed a slow spring warm-up for declining first-quarter U.S. retail sales.

The stocks of makers of big, mobile toys such as Polaris and Harley-Davidson may be hurt by investors' concerns about rising interest rates and gas prices, and potentially slower economic growth, said Edward Aaron, a stock analyst for Denver-based RBC Capital Markets.

"Harley's always been viewed as the bellwether for the industry, and in some respects the gold standard," he said. Though many of Harley's financial woes are specific to itself, it wouldn't be surprising to see Harley's problems contribute to the drop in Polaris' stock, he said.

Tiller on Thursday stood by Polaris' earlier 2005 earnings and sales forecasts.

"There are challenges facing Polaris," Aaron said, "but considering their history, they're not a company to bet against." RBC Capital doesn't do business with Polaris and Aaron doesn't own stock in the company.

Polaris' line of Victory motorcycles accounted for less than 10 percent of company revenues in the first quarter, but the cycles' sales have been on a steady rise. Shipments were up 12 percent in the first quarter against last year's, and Tiller told analysts Thursday that retail sales were up more than 30 percent.

"We're outperforming the industry," Tiller said.

Snowmobiles have been a different story. Sales were down 46 percent compared with the same quarter last year, when snow was in abundance. Tiller said that snowfall across the Midwest has been below normal six of the last seven seasons. Until there's "meaningful snow" in the Upper Midwest, perhaps for a couple of seasons, he said, the snowmobile segment could be an uphill battle.

Chief competitor Arctic Cat Inc., based in Thief River Falls, Minn., also saw its stock slide this week. Stock of the maker of snowmobiles and ATVs closed at $24.78 on Thursday, down $2.56 from Tuesday's closing price.

POLARIS INDUSTRIES

First Qtr. ended March 31

(in thousands, except per share)