With an accelerating deployment of COVID-19 vaccine around the world, people are returning to outdoor recreational activities increasingly. With this, demand for products and services in segments such as boating, golf, hunting and camping is surging. Since many people are still reluctant to travel on vacation, particularly on planes and ships, they are seeking outdoor recreation to relax in lieu of travel vacations, and boating is seeing heightened popularity.
According to the National Marine Manufacturers Association, more than 310,000 new powerboats were sold in 2020, a level not seen since before the 2008 recession. Boat sales are expected to remain at historically high levels in 2021 as manufacturers continue to fill backlogged orders from 2020.
With college and school sports still paused, and international vacations widely eschewed, many people are turning to boat purchases to meet their outdoor fun needs while maintaining a degree of social distance. This has boosted demand for products offered by some of the top boating companies, including Brunswick Corporation (BC), Marine Products Corporation (MPX), and OneWater Marine Inc. (ONEW).
With strong liquidity and multi-tiered growth strategies, we believe the shares of these companies should continue to advance in the coming months.
Brunswick Corporation (BC)
Headquartered in Mettawa, Illinois, since 1845 BC has been a manufacturer and seller of marine engine products, marine electronics and control integration systems, and integrated propulsion systems to the recreational and commercial marine markets. It also markets boats for commercial and government customers through dealers and distributors.
On January 25, BC announced the expansion of its boat production capacity at three of its manufacturing facilities to meet growing demand from its global customers. The company’s Vila Nova expansion plan is underway and over the next three years is expected to more than double production capacity at the facility. Also, in January, the company launched BoatClass, an on-water training program to teach boating safety and assist boaters in gaining confidence on the water. This world-class training program will help the company welcome new boaters as well as deliver affordable boating education to its customers.
BC’s net sales have increased 26.5% year-over-year to $1.16 billion in the fourth quarter ended December 31, 2020. Its operating earnings have grown 83.2% from its year-ago value to $136.5 million, while its operating margin increased 370 basis points year-over-year to 11.8%. The company’s EPS grew 47.6% from the prior-year quarter to $1.20.
A consensus EPS estimate of $6.39 for 2021 represents a 26% improvement year-over-year. Also, BC beat the Street’s EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $5.03 billion for the current year represents a 15.8% increase from the same period last year. The stock has gained 43.7% over the past year.
BC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
BC has an A grade for Quality and a C grade for both Momentum and Value. Of the 33 stocks in the A-rated Athletics & Recreation industry, BC is ranked #4.
In total, we rate BC on eight different levels. Beyond what we have stated above we have also given BC grades for Stability, Sentiment, and Growth. Get all the BC ratings here.
Marine Products Corporation (MPX)
Based in Atlanta, Georgia, MPX manufactures and sells recreational fiberglass powerboats for the sportboat, jet boat, and sport fishing markets worldwide. The company provides Robalo outboard sport fishing boats and Vortex jet boats under the Chaparral brand name. It sells its products to a network of 195 domestic and 93 international, independent authorized dealers.
In December, MPX appointed Patrick J. Gunning to the company’s Board of Directors. His extensive financial, accounting and management skills and leadership experience should help the company to increase its market share and to generate superior financial performance.
MPX’s revenue has increased 47.6% year-over-year to $71.11 million in the fourth quarter ended December 31, 2020. Its gross profit grew 65.7% from the prior-year quarter to $17.43 million due to the efficiency benefits of higher boat production. The company’s net income increased 97.5% year-over-year to $6.99 million, while its EPS grew 110% from the year-ago value to $0.21.
A consensus EPS estimate of $0.23 for the quarter ending June 30, 2021 represents a 360% improvement year-over-year. The consensus revenue estimate of $76.52 million for the next quarter represents an 87.5% increase from the same period last year. The stock has gained 25.8% over the past year.
It is no surprise that MPX has an overall rating of B, which translates to Buy in our POWR Ratings system. MPX also has a B grade for Quality and Growth. It is ranked #18 of 33 stocks in the A-rated Athletics & Recreation industry.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the MPX ratings for Stability, Sentiment, Value, and Momentum here.
OneWater Marine Inc. (ONEW)
Founded in 2014, ONEW is a recreational boat retailer in the United States. The company markets rental boats, personal watercraft, new and used recreational boats and yachts, as well as related marine products such as parts and accessories. As of September 30, 2020, ONEW operated 61 stores, comprising 21 dealer groups in 10 states.
ONEW completed the acquisition of Roscioli Yachting Center, Inc. in January. The acquisition included related real estate and in-water slips. This transaction should expand ONEW’s presence in the yacht category, while diversifying its service and repair offerings.
In December, the company completed the acquisition of Tom George Yacht Group, which will enhance its presence on the west coast of Florida while expanding its new and used boat sales. TGYG marks the company’s first acquisition since going public in early 2020 and is one of the largest acquisitions in ONEW’s history.
ONEW’ total revenue has increased 39.3% year-over-year to $214.08 million in the fiscal first quarter ended December 31, 2020. Its gross profit increased 62.9% from its year-ago value to $52.44 million, while its gross margin grew 360 basis points year-over-year to 24.5%, due primarily to a shift in the mix and size of boat models sold. The company’s net income has increased sharply to $11.8 million, compared to a net loss of $1.1 million in the fiscal first quarter of 2020.
A consensus EPS estimate of $4.30 for 2021 represents a 55.2% improvement year-over-year. The consensus revenue estimate of $1.21 billion for the current year represents an 18.6% increase from the same period last year. The stock has gained 147% over the past year.
ONEW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B which equates to Buy in our POWR Ratings system. ONEW has a B grade for Growth, Momentum and Sentiment. In the same industry, it is ranked #8 among the 33 stocks in the A-rated Athletics & Recreation industry.
Click here to see the additional POWR Ratings for ONEW (Stability, Value, and Quality).
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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BC shares were trading at $90.70 per share on Friday morning, down $0.01 (-0.01%). Year-to-date, BC has gained 18.97%, versus a 4.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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