The recreational boating market is growing with people’s increasing interest and participation, both as an exciting outdoor activity and its fitness-related benefits. The industry is a top contender in luxury leisure activities. There are about 140 million boaters worldwide, with 100 million across the United States and Canada. The market was valued at $27.32 billion in 2021.
According to a study, the global leisure boat market is expected to increase at a CAGR of 8.5% until 2025, with 59% of growth to be attributed to North America due to increasing engagement of consumers.
With the boating industry forecasted to reach $36.78 billion by 2027, growing at a 5.1% CAGR, we think MasterCraft Boat Holdings, Inc. (MCFT), BRP Inc. (DOOO), MarineMax, Inc. (HZO) might be solid buys this summer season.
MasterCraft Boat Holdings, Inc. (MCFT)
MCFT is a leading innovator, designer, manufacturer, and marketer of recreational power-boats through the MasterCraft; NauticStar; and Crest segments. The company’s offerings include recreational performance sports boats, boats for saltwater fishing, and pontoon boats.
In late May, the company announced an exclusive run of 25 limited edition boats, namely, the XStar S Piranha Limited Edition model. George Steinbarger, Chief Revenue Officer at MCFT, said, “We designed this limited edition XStar S to showcase the superior performance and edge that the Ilmor Supercharged 6.2L engine delivers with the most premium boat out on the water.”
In the fiscal third quarter ended April 3, MCFT’s net sales increased 26.3% year-over-year to $186.74 million. Adjusted net income went up 17.4% from the same period last year to $22.42 million, while adjusted net income per common share stood at $1.21, up 19.8% from the prior-year period.
The consensus EPS estimate of $1.49 for the fourth quarter (ending June 2022) indicates a 52.3% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $194.52 million reflects a rise of 25.1% from the prior-year quarter. Moreover, MCFT has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 1.9% over the past month and 2.6% over the past five days to close the last trading session at $23.99.
MCFT’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MCFT is rated an A for Value and B for Growth. Within the Athletics & Recreation industry, it is ranked #4 out of 38 stocks. To see additional POWR Ratings for Momentum, Stability, Sentiment, and Quality for MCFT, click here.
BRP Inc. (DOOO)
Based in Valcourt, Canada, DOOO manufactures and markets power-sports vehicles and marine products globally. The company operates through two segments: Powersports and Marine. Its products are sold through a network of independent dealers, distributors, and original equipment manufacturers.
In March, DOOO announced the return of the Can-Am brand of motorcycles, with a product line-up that will be completely electric. The new products should add to the company’s revenue stream.
DOOO’s revenues increased marginally year-over-year to CAD1.81 billion ($1.44 billion) in the fiscal first quarter ended April 30. Net income and EPS came in at CAD121 million ($96.23 million) and CAD1.46, respectively. Net cash flows generated from financing activities came in at CAD232.50 million ($184.92 million), up substantially from its negative year-ago value.
Street expects DOOO’s EPS to increase 93% year-over-year to $2.23 for the next fiscal quarter (ending October 2022). Likewise, analysts expect revenue for the same period to rise 50.4% year-over-year to $1.86 billion. In addition, DOOO has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Over the past three months, DOOO’s stock has gained 3.3% to close yesterday’s trading session at $67.54.
It is no surprise that DOOO has an overall B rating, which translates to Buy in our POWR Rating system.
DOOO has a Value and Sentiment grade of B. It is ranked #3 in the Athletics & Recreation industry.
In addition to the POWR Rating grades we’ve stated above, one can see DOOO ratings for Growth, Momentum, Stability, and Quality here.
MarineMax, Inc. (HZO)
HZO is a recreational boat and yacht retailer and a superyacht service company operating in the United States. It operates through two segments: Retail Operations and Product Manufacturing, and sells new and used recreational boats.
In April, HZO declared that it had invested in Boatzon, an online boat and marine retailer. The investment is expected to support the company’s goal of higher-margin business growth and diversification of its portfolio.
Earlier in the same month, HZO announced its acquisition of Superyacht Management, S.A.R.L., a superyacht management company based in Golfe Juan, France. The acquisition is expected to expand HZO’s superyacht brokerage subsidiary Northrop & Johnson’s services offerings.
For the fiscal second quarter ended March 31, HZO’s revenue increased 16.6% year-over-year to $610.11 million, while net income was up 37.4% from the prior-year quarter to $53.51 million. Net income per common share rose 40.2% from the same period last year to $2.37.
Street EPS estimate for the third fiscal quarter (ending June 2022) of $3.03 indicates an improvement of 16.8% from the prior-year period. Street revenue estimate for the third quarter of $763.49 million indicates a 14.6% year-over-year increase. Additionally, HZO has topped consensus EPS estimates in each of the trailing four quarters.
HZO’s shares have gained 1.7% intraday to close yesterday’s trading session at $41.18.
HZO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
HZO has an A grade for Value and Quality and a B grade for Growth. It is ranked #2 in the same industry.
In addition to the POWR Ratings grades I’ve just highlighted, one can see HZO ratings for Momentum, Stability, and Sentiment here.
MCFT shares were trading at $24.20 per share on Tuesday afternoon, up $0.21 (+0.88%). Year-to-date, MCFT has declined -14.58%, versus a -12.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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