Standard & Poor's Ratings Services has raised its outlook on Briggs & Stratton Corp. (BGG) to positive, citing the small-engine producer's strong cash-flow generation and continued efforts to reduce debt.

The rating agency also said Briggs' operating performance is beginning to show signs of recovery, though sales and margins are below pre-recessionary levels. The company is expected to see modest revenue growth on stabilizing economic conditions and higher replacement demand as well as relatively stable operating margins.

S&P rates Briggs, which makes small gasoline engines that run lawn equipment and other machines found in home garages, at BB-, three steps below investment-grade territory, because its markets are mature and competitive and its businesses have a high degree of seasonality and earnings because they are affected by bad weather. In addition, lawn and garden engine sales are discretionary.

Last week, Briggs reported its fiscal first-quarter loss narrowed slightly as revenue rose 2.9%. Its shares recently traded at $17.67, up 0.7%. The stock is down 6% this year.