Bear Of The Day: Arctic Cat
Headquartered in Thief River Falls, MN, Arctic Cat Inc. (ACAT) is a designer, manufacturer and marketer of All-terrain vehicles (ATVs) & Side-by-Sides, Snowmobiles, and Parts, garments & accessories. The company markets its products through a network of independent dealers and distributors.
Disappointing Results and Downbeat Guidance
ACAT reported it Q4 FY 2015 results on May 13. Adjusted net loss for the quarter was $1.15 per share, slightly better than the Zacks Consensus Estimate which called for a loss of $1.17 per share. However revenue was short of street consensus, primarily reflecting lower sales volumes, planned core ATV inventory reduction and unfavorable foreign currency exchange.
Snowmobile sales were down to $5.3 million from $6.4 million in the prior year quarter, primarily due to the timing of shipments and lower international sales, including sales to Russia. ATV sales also declined to $266.8 million from $105.9 million in the same period a year ago.
For fiscal 2016 the management expects earnings in the range of $0.80 to $0.95 per share, much weaker than street’s earlier estimates.
Downward Revisions
The stock plunged after weak results and guidance and the downward trend will likely continue as analysts continue to cut earnings estimates for current and the next fiscal year. Zacks Consensus Estimates for FY2016 and FY2017 are down to $1.02 per share and $1.91 per share from $1.75 per share and $2.30 per share respectively, 7 days ago.
The following chart shows the declining estimates trend for ACAT:
Declining estimates sent ACAT back to Zacks Rank # 5 (Strong Sell) last week.
Investors seeking exposure to the industry could look at Smith & Wesson Holding Corporation (SWHC) which has recently jumped to a Zacks Rank #1 (Strong Buy), after impressive results and strong guidance.
Disclosure: None.