The Disappearing Arctic Cat

Arctic Cat could be an endangered company. I use the word "company" and not "species" as I am referring to Minnesota-based Arctic Cat Inc. (ACAT), maker of snowmobiles and ATVs.

The company has a strong history of poaching its own shares. Here are the numbers:

Year Shares Outstanding (mm)
3/07 18.4
3/06 19.4
3/05 20.1
3/04 21.0
3/03 22.0
3/02 23.3
3/01 23.8
3/00 24.9
3/99 26.4
3/98 28.4

The trend continues with another $10 million buyback announced in January. Factor in a 3.2% dividend yield and a 2 year sell off which brought the stock from $26 to under $9 currently and you have the beginning of an investment thesis.

Of course there's also what to worry about regarding consumer spending on discretionary items, and the lack of cash on the company's balance sheet. With 34% of the float short, I don't doubt that there's a valid bear case here too.

Are there any snowmobilers out there to chime in?

Comments

[dragonlady53:]

No Wonder when Arctic Cat Dealers are going under on a daily basis
with no help from Arctic Cat. Forced to buy units beyond the market
can bear, then promises from Arctic Cat broken when they won't take
the units back like promised. Oh yeah I am one of these dealers who
will have to file for bankrupcy and loose all we have worked for.

2008 May 06 12:28 PM

[joe atv buyer:]

Well, no wonder they are going under.
I just bought a Artic Cat ATV and its a piece of garbage! On second engine!! I get terrible service from my dealer and even worse form Artic cat! I will NEVER buy a artic Cat agian AND I am going out of my way to warn new buyers from getting into Artic Cat. Good riddance to you all!!

Feb 01 11:25 PM