Estimates have come down after disappointing third quarter
results, sending ACAS to a Zacks Rank # 5 (Strong Sell).
About the Company
Headquartered in Thief River Falls, MN,
Arctic Cat Inc. (
is a designer, manufacturer and marketer of All-terrain vehicles
(ATVs) & Side-by-Sides, Snowmobiles, and Parts, garments &
During FY 2013, ATV and Side-by-Sides contributed 45% of sales and
Snowmobiles accounted for 39%.
Disappointing Third Quarter Results
On December 31, 2013, ACAT reported its Q3 2013 results--that
missed both on the top and bottom line. Net sales for the quarter
increased 4% year-over-year to $225.8 million. While ATV sales
increased 12% to $78.2 million, driven mainly by Side-by-Side
sales, Snowmobile sales declined 4% to $118.1 million.
Gross profits declined for the quarter to $40.2 million from $50.8
million reported in the prior-year quarter. According to the
management, sales of lower margin Yamaha snowmobiles and the weaker
Canadian dollar and product mix contributed to the decline.
Operating net earnings for the quarter were $12.1 million, down
from $17.9 million, or $0.89 per share, down from $1.30 per share
in the same quarter last year. Operating income was much worse than
the Zacks Consensus Estimate of $1.26 per share. This was the
second consecutive quarter of earnings miss by the company.
Downbeat Guidance and Downwards Revisions
At the time of reporting third quarter results, the management also
revised their year-end guidance and they now expect fiscal 2014
revenue to be up by 10% to 12% in the $740 million to $750 million
range and earnings to to be in the $2.90 to $3.00 per share range.
This was significantly below their previous guidance of revenue in
the $754 million to $768 million range and earnings in the $3.27 to
$3.37 per share range.
According to the management, the snowmobiles built for Yamaha, the
Canadian currency and product mix remain main issues for the
Zacks Conesnus Estimates for the current year and next year have
gone down to $2.92 and $3.38 per share from $3.28 and $3.71 per
share respectively, 30 days ago.
The follwing "Price and Consenus" chart shows the negatve earnings
The Bottom Line
While the company is trying to launch innovative new products as
well as expand into new market segments and international markets,
near-term headwinds will impact the share price.
ACAS is currently Zacks Rank # 5 (Strong Sell) stock and as such
investors would like to avoid this stock until there are clear
signs of improvement in its performance.
Investors seeking exposure to the industry could look at Sturm
Ruger & Co (RGR), a Zacks Rank #1 (Strong Buy) stock.
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ARCTIC CAT INC (ACAT): Free Stock Analysis
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