Arctic Cat Shares Jumped: What You Need to Know
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 (NAS: ACAT) jumped 20% today after announcing it was buying back shares from Suzuki Motor.
So what: Arctic Cat will buy back the 33% stake that Suzuki owns for $79.3 million, a $13-per-share price. The deal will reduce shares outstanding to 12.3 million, from 18.4 million, and will leave the company with $60 million in cash after the purchase.
Now what: This certainly looks like a sweetheart deal for shareholders, with shares now trading over $22 per share. The stock is now trading at new 52-week highs, momentum that I think can continue now that the company is free of Suzuki. The current P/E ratio of 22.5 will also come down as analysts update the lower share count as a result of this deal.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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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