Arctic Cat Misses, Profit Up - Analyst Blog


Arctic Cat Inc. ( ACAT ) reported a 41.3% rise in earnings per share to $1.30 in the third quarter of fiscal 2013 (ended Dec 31, 2012) from 92 cents in the year-ago quarter. Net income went up 4.8% to $17.9 million from $17 million a year ago. However, the earnings per share missed the Zacks Consensus Estimate by 3 cents.

Revenues for the quarter increased 5.3% year over year to $218 million, missing the Zacks Consensus Estimate of $224 million. The growth was attributable to higher North American sales of Wildcat and Prowler side-by-sides and All-Terrain Vehicles (ATVs).

Gross profit increased 6.3% to $50.8 million or 23.3% of sales from $47.7 million or 23.1% of sales in the year-ago quarter. The increase was attributable to higher sales volume. Operating income climbed 5.7% to $27.7 million from $26.2 million recorded in the third quarter of fiscal 2012.

Segment Results

Revenues from the Snowmobile & ATV business improved 6.9% to $191.9 million, driven by higher revenues from the ATV business, partly offset by a decrease in revenues from the Snowmobiles business.

Revenues from the ATV business surged 27.8% to $69.6 million. The improvement was driven by higher global demand from dealers and distributors for the Wildcat side-by-side. Revenues from the Snowmobiles business declined 2.2% to $122.4 million.

Revenues from the parts, garments and accessories (PG&A) business went down 4.9% to $26 million. The decline was due to a fall in snowmobile garment sales arising from lower-than-expected snowfall. Meanwhile, increase in sales volume of Wildcat parts and accessories had a favorable impact on the segment's revenues.

Financial Position

Arctic Cat had cash and short-term investments of $96.6 million as of Dec 31, 2012, compared with $76.3 million as of Dec 31, 2011.


Arctic Cat expects revenues between $664 million and $684 million for fiscal 2013, representing an annual increase of about 13% to 17%. The company raised its earnings per share guidance from $2.65-$2.75 to $2.75-$2.85. The increased earnings guidance reflects a year-over-year rise of 60%-66%.

Our Take

Arctic Cat makes snowmobiles and ATVs under the Arctic Cat brand name and supplies related parts, garments, and accessories. The company markets its products through a network of independent dealers located throughout the U.S and Canada, and through distributors representing dealers in AK, Europe, Middle East, Asia and other international markets. Currently, it carries a Zacks Rank #4 (Sell).

Smith & Wesson Holding Corporation ( SWHC ), Sturm, Ruger & Co. Inc. ( RGR ) and Polaris Industries, Inc. ( PII ) are performing well in the same industry where Arctic Cat operates. While Smith & Wesson and Sturm, Ruger & Co. are Zacks Rank #1 (Strong Buy) stocks, Polaris Industries Inc. is a Zacks Rank #2 (Buy) stock.

ARCTIC CAT INC (ACAT): Free Stock Analysis Report

POLARIS INDUS (PII): Free Stock Analysis Report

STURM RUGER&CO (RGR): Free Stock Analysis Report

SMITH & WESSON (SWHC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ACAT , PII , RGR , SWHC

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