As we find ourselves in the midst of yet another earnings season, I wanted to take a closer look at the upcoming earnings for one particular company in the recreational vehicle sector and share my thoughts on what needs to happen in order for Arctic Cat (ACAT) to meet and/or surpass analysts' expectations.

Company Overview

Headquartered in Plymouth, Minnesota, Arctic Cat Inc. designs, engineers, manufactures, and markets snowmobiles and all-terrain vehicles (ATVs), and recreational off-highway vehicles under the Arctic Cat brand name. It also provides related parts, garments, and accessories. The company also offers accessories consisting of bumpers, cabs, luggage racks, lights, snow plows, backrests, windshields, wheels, track systems, and winch kits; shocks, attachments, and float avalanche airbags; and maintenance supplies, such as oil and fuel additives.

Recent Trend Behavior

On Tuesday, shares of ACAT, which currently possess a market cap of $421.19 million, a forward P/E ratio of 12.41, and a PEG ratio of 0.74, settled at a price of $32.60/share. Based on a closing price of $32.60/share, shares of ACAT are trading 2.41% below their 20-day simple moving average, 8.17% below their 50-day simple moving average, and 19.79% below their 200-day simple moving average.

These numbers indicate both a short-term and a long-term downtrend for the stock, which generally translates into a selling mode for most near-term traders as well as a selling mode for many long-term investors.

If the company can demonstrate a stronger-than-expected earnings performance when it announces FQ2 results on October 23, there's a very good chance the company's trend behavior will continue to move in a fairly positive upward direction.

Upcoming Earnings Outlook

When it comes to the company's upcoming FQ2 earnings, there are a number of things potential investors should consider. For instance, analysts are currently calling for ACAT to earn $1.18/share in terms of EPS (which is $0.52/share lower than what the company had reported during FQ2 2013) and $253.26 million in terms of revenue when its latest earnings are released on October 23.

In order to meet and/or exceed its quarterly EPS estimates, I'd like to see a 6%-to-10% increase in the company's FQ2 Net Sales (as compared to FQ2 2013s Net Sales), a 12%-to-15% increase in Snowmobile Sales (as compared to FQ2 2013s Snowmobile Sales), and lastly, a 3%-to-5% increase in the company's EPS (as compared to FQ2 2013’s EPS).

Conclusion

For those of you who may be considering a long-term position in Arctic Cat, I'd actually recommend keeping a closer eye on the company's upcoming earnings that are due on October 23, as a strong quarterly performance could fuel an improved trend performance over the next 20, 50 and 200 day periods. If the company meets or exceeds analysts’ estimates, there's a very good chance shares will begin trading in the $34/share-to-$40/share range before we know it.