Why Arctic Cat (ACAT) Stock Is Down Today

NEW YORK (TheStreet) -- Arctic Cat (ACAT) was falling -12.6% to $34.00 Thursday after missing analysts' expectations for earnings and revenue in the fiscal fourth quarter.

For the fourth quarter Arctic Cat reported a loss of -12 cents a share, missing the Capital IQ Consensus Estimate of a loss of -11 cents a share by 1 cent. Revenue grew 28.4% from the year-ago quarter to $145.4 million. Analysts expected $154.17 million in revenue for the quarter.

Looking forward to full-year 2015 Arctic Cat expects EPS of $2.33 to $2.43 a share, though it may not be comparable to analysts' estimates of $3.37 a share. The company expects revenue of $775 million to $786 million for the year, compared to analysts' expectations of $804.78 million in revenue for the year.

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TheStreet Ratings team rates ARCTIC CAT INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ARCTIC CAT INC (ACAT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.9%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 1.13, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 1101.78% to $24.30 million when compared to the same quarter last year. In addition, ARCTIC CAT INC has also vastly surpassed the industry average cash flow growth rate of 55.94%.
  • ARCTIC CAT INC's earnings per share declined by 31.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARCTIC CAT INC increased its bottom line by earning $2.86 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $2.86).
  • You can view the full analysis from the report here: ACAT Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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