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TheStreet Open House

TheStreet Ratings Top 10 Rating Changes

Rating Change #2

Arctic Cat (ACAT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • ACAT's revenue growth has slightly outpaced the industry average of 15.5%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ACAT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 48.00% and other important driving factors, this stock has surged by 105.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • ARCTIC CAT INC has improved earnings per share by 48.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ARCTIC CAT INC increased its bottom line by earning $0.70 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.70).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Leisure Equipment & Products industry average. The net income increased by 48.1% when compared to the same quarter one year prior, rising from -$4.48 million to -$2.32 million.

Arctic Cat Inc. designs, engineers, manufactures, and markets snowmobiles and all-terrain vehicles (ATVs) under the Arctic Cat brand name in the United States and internationally. It also offers related parts, garments, and accessories. The company has a P/E ratio of 18.9, below the average automotive industry P/E ratio of 19.1 and above the S&P 500 P/E ratio of 17.7. Arctic Cat has a market cap of $189.4 million and is part of the consumer goods sector and automotive industry. Shares are up 7.4% year to date as of the close of trading on Friday.

You can view the full Arctic Cat Ratings Report or get investment ideas from our investment research center.

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