Although summer has so far brought above-average temperatures, people have been stepping outside to engage in recreational activities. The outdoor recreation industry is booming as consumers phased out of the pandemic years.
Recreation clubs market is growing amid rising disposable income, country club sector growth, and golf tourism, with millennial segment holding the major share. The recreation clubs market is estimated to reach $91.40 billion by 2031, growing at a CAGR of 6.5% until 2031.
Furthermore, government efforts like the America’s Outdoor Recreation Act is a first-of-its-kind comprehensive recreation package to improve and expand outdoor recreation economy. This bipartisan package contains several ground-breaking recreation bills that should boost the industry.
Let’s delve deeper into the fundamentals of the stocks.
BRP Inc. (DOOO)
Headquartered in Valcourt, Canada, DOOO, together with its subsidiaries, designs, develops, manufactures, distributes, and markets powersports vehicles and marine products in North America, Europe, Australia, New Zealand, and Latin America.
On April 11, 2023, DOOO opened the doors to its first European Design & Innovation Centre. This new Centre, located in Sophia Antipolis in the south of France, reaffirms BRP’s commitment to design and innovation as a development driver.
This installation in Sophia Antipolis demonstrates BRP’s intention to become even more immersed in European trends and to continue to deliver solutions that fit the current and future demands of its clients and the communities in which it operates.
DOOO’s forward EV/Sales multiple of 0.98 is 12.6% lower than the industry average of 1.12. Its forward EV/EBITDA multiple of 5.75 is 36.9% lower than the industry average of 9.12.
DOOO’s trailing-12-month ROTC of 30.26% is 378.8% higher than the industry average of 6.32%. Its trailing-12-month ROCE of 432.71% is significantly higher than the industry average of 10.71%.
For the fourth quarter that ended January 31, 2023, DOOO’s net sales came in at C$3.08 billion ($2.30 billion), up 31% year-over-year. Its gross profit came in at C$787.60 million ($588.15 million), up 29.2% year-over-year.
Also, its net income increased 74.2% year-over-year to C$365.10 million ($272.64 million). Its EPS came in at C$3.85, up 22.1% year-over-year.
Analysts expect DOOO’s revenue to increase 11.7% year-over-year to $8.17 billion in 2024. Its EPS is expected to grow 6.01% to $9.31 in 2024. It surpassed EPS estimates in all four trailing quarters. DOOO’s shares have gained 14.8% over the past six months to close the last trading session at $74.85.
DOOO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
DOOO has a B grade for Growth and Sentiment. Within the Athletics & Recreation industry, it is ranked #2 out of 37 stocks. Click here for the additional POWR Ratings for Value, Momentum, Stability, and Quality for DOOO.
MasterCraft Boat Holdings, Inc. (MCFT)
MCFT designs, manufactures, and markets recreational powerboats. The company operates through four segments: MasterCraft; Crest; NauticStar; and Aviara.
MCFT’s forward EV/Sales multiple of 0.75 is 32.9% lower than the industry average of 1.12. Its forward EV/EBITDA multiple of 4.07 is 55.3% lower than the industry average of 9.12.
MCFT’s trailing-12-month EBIT and levered FCF margin of 15.81% and 13.99% are 112.3% and 373.7% higher than the industry averages of 7.44% and 2.95%, respectively.
MCFT’s net sales increased 10.2% year-over-year to $159.19 million in the fiscal 2023 second quarter that ended January 1, 2023. The company’s adjusted EBITDA increased 9.8% year-over-year to $29.82 million. Its adjusted net income increased 11% from the prior-year quarter to $21.27 million, while adjusted EPS increased 18.8% year-over-year to $1.20.
Street expects MCFT’s EPS to increase marginally year-over-year to $4.56 in 2023. It surpassed EPS estimates in all the four trailing quarters. Over the past six months, the stock has gained 26.6% to close the last trading session at $28.66.
It’s no surprise that MCFT has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B for Value and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated MCFT for Growth, Sentiment, Stability, and Momentum. Get all MCFT ratings here.
Marine Products Corporation (MPX)
MPX designs, manufactures, and sells recreational fiberglass powerboats worldwide for sport boats, fishing, and jet boat markets.
MPX’s trailing-12-month EV/EBITDA multiple of 7.62 is 24% lower than the industry average of 10.03. Its trailing-12-month Price/Sales multiple of 1.18 is 38.7% lower than the industry average of 0.85.
MPX’s trailing-12-month ROTC of 29.77x is 371% higher than the 6.32x industry average. Its trailing-12-month ROTA of 24.34% is 508.4% higher than the 4% industry average.
MPX’s net sales came in at $118.91 million for the fiscal first quarter that ended March 31, 2023, up 55.2% year-over-year. Its gross profit increased 57.8% year-over-year to $29.02 million. Its net income and net income per share came in at $11.55 million and $0.34, up 63.5% and 61.9% year-over-year, respectively.
Over the past six months, the stock has gained 33.9% to close its last trading session at $14.60.
MPX’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, translating to Strong Buy in our proprietary rating system.
It also has an A grade for Growth and a B grade for Sentiment and Quality. It is ranked first within the same industry. Click here to see the additional ratings for MPX (Momentum, Stability, and Value).
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DOOO shares were unchanged in premarket trading Wednesday. Year-to-date, DOOO has declined -1.80%, versus a 8.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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