Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Arctic Cat (NASDAQ:ACAT) were getting the cold shoulder from investors today, falling as much as 18% after delivering an underwhelming second-quarter-earnings report this morning.
So what: The snowmobile maker posted earnings per share of $1.70, down from $1.80 a year ago, and below the analyst consensus at $1.96, while revenues increased 4.1% to $238.5 million, short of expectations at $251.6 million. CEO Claude Jordan noted that ATV sales in North America and Europe fell short of expectations in the quarter, impacting profitability, and said he expects a "challenging second half of the year." Despite the setback, Arctic Cat is maintaining its fiscal 2014 outlook of an EPS of $3.27-$3.37, and revenue of $754 million-$768 million, both in line with estimates.
Now what: Considering that Arctic Cat's EPS guidance represents a 13%-17% increase from the year before, the stock looks far from broken. With new products coming on the market including two new pure-sport side-by-sides and a Wildcat 50 Trail model, and European demand expected to pick-up as the eurozone moves out of recession, I'd expect Arctic Cat to bounce from this weak quarter. For long-term investors, there's no reason to panic here.
Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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