As the pandemic ends, people are more likely to engage in outdoor activities. Investors could also consider purchasing BRP (DOOO), MasterCraft Boat Holdings MCFT, and Marine Products MPX, in light of the government's efforts. Continue reading.
Even though the summer temperatures have been above average, people are still going outside to enjoy recreational activities. As consumers move away from the pandemic-era, outdoor recreation is experiencing a boom.
Investors could invest in BRP Inc., MasterCraft Boat Holdings, Inc., and Marine Products Corporation.
The growth of the recreation clubs market is attributed to a growing disposable income, country club sector expansion, and golf tourism. The millennial segment holds the largest share. The market for recreation clubs is expected to reach $91.40 Billion by 2031. This represents a 6.5% CAGR.
Moreover, the America's Outdoor Recreation Act (AOR) is a comprehensive recreation package that was created for the first time to expand and improve outdoor recreation. This bipartisan package includes several groundbreaking recreation bills which should boost the industry.
Let's dig deeper into the fundamentals.
DOOO is headquartered in Valcourt (Canada), and together with its subsidiary companies, designs, develops and manufactures powersports vehicles, marine products, distributes and markets them in North America and Europe, Australia, New Zealand and Latin America.
DOOO will open its first European Design & Innovation Centre on April 11, 2023. This new centre, located in Sophia Antipolis, in the south-west of France, is a reaffirmation of BRP's commitment towards design and innovation.
The installation at Sophia Antipolis is a demonstration of BRP's desire to immerse itself in European trends, and to continue delivering solutions that meet the needs and expectations of clients and communities.
DOOO's EV/Sales forward multiple of 0.98, is 12.6% less than the average industry multiple of 1.12. The forward EV/EBITDA multiplication of 5.75, which is 36.9% less than the average industry multiple of 9,12, is 12.6% lower.
DOOO's ROTC for the trailing 12 months of 30.26%, is 378.8% greater than the industry-average of 6.32%. Its ROCE for the trailing 12 months is 432.71%, which is much higher than industry average 10.71%.
DOOO's fourth quarter net sales ended on January 31, 2023 at C$3,08 billion ($2,30 billion), an increase of 31% over the previous year. Its gross income was C$787.60 ($588.15 millions), an increase of 29.2% over the previous year.
Its net income also increased by 74.2% over the past year to C$365.10 millions ($272.64million). The company's EPS was C$3.85, an increase of 22.1% over the previous year.
Analysts predict that DOOO's revenue will increase by 11.7% annually to $8.17 Billion in 2024. In 2024, its EPS will grow 6.01% from $9.31 to $10.07. In all four quarters, it exceeded EPS expectations. DOOO shares closed the last trading day at $74.85, up 14.8% in the past six-month period.
The POWR ratings of DOOO reflect this positive outlook. The stock is rated B overall, which is equivalent to a Buy under our proprietary rating system. The POWR ratings assess stocks based on 118 factors, each of which has its own weighting.
DOOO is rated B for Growth and Sentiment. It is ranked second out of 37 stocks in the Athletics & Recreation Industry. Click here to see the additional POWR ratings for DOOO for Value, Momentum and Stability.
MasterCraft Boat Holdings, Inc.
MCFT is a company that designs, manufactures and markets recreational motorboats. The company is divided into four segments: MasterCraft, Crest, NauticStar and Aviara.
MCFT’s forward EV/Sales Multiple of 0.75, is 32.9% less than the average industry multiple of 1.12. The forward EV/EBITDA multiplication of 4.07 is 56.3% less than the average industry multiple of 9.12.
MCFT’s EBIT for the trailing 12 months and FCF levered margins of 15.81% (and 13.99%) are respectively 112,3% and 373,7% higher than industry averages, which are 7.44% and 2.95%.
MCFT's second quarter fiscal 2023 net sales, which ended on January 1, 2023, increased by 10.2% over the previous year to $159.19 millions. The company's EBITDA adjusted increased by 9.8% over the past year to $29.82 millions. The company's adjusted net profit increased by 11% to $21.27million, and adjusted EPS increased by 18.8% to $1.20.
Street forecasts MCFT EPS will increase slightly year-over-year, to $4.56 by 2023. In all four quarters, it exceeded EPS expectations. The stock closed the last trading day at $28.66, a gain of 26.6% over the past six-month period.
MCFT's overall B rating is not surprising. It equates to a Buy on our POWR Ratings System. It is rated B for both Value and Quality. It is ranked third in the same sector.
In addition to the above ratings, we have also given MCFT ratings for Growth, Sentiment Stability and Momentum. All MCFT ratings are available here.
Marine Products Corporation (MPX).
MPX manufactures and sells recreational fiberglass boats worldwide, including sport boats, fishing and jetboats.
MPX's trailing-12 month EV/EBITDA multiplier of 7.62 compares to the industry average of 10,03 by 24%. The trailing-12 month Price/Sales Multiple of 1.18 is 38.7% less than the average industry multiple of 0.85.
The ROTC for MPX is 29.77x, which is 371% more than the industry average of 6.32x. Its ROTA for the trailing 12 months is 24.34%, which is 5084% more than the industry average of 4%.
MPX's first-quarter fiscal 2023 net sales were $118.91 millions, an increase of 55.2% over the previous year. Gross profit increased by 57.8% over the past year to $29.02 millions. Net income and net profit per share were $11.55 and $0.34 respectively, an increase of 63.5%, 61.9% and 63.5% year-over-year.
In the last six months, the stock gained 33.9% and closed its last trading session on $14.60.
MPX's POWR ratings reflect its solid future prospects. Our proprietary rating system gives the stock an A-rating, which translates to a Strong Buy.
Also, it has a grade of A for Growth and a grade B for Sentiment & Quality. It is ranked number one in the same industry. Click here to view the additional ratings of MPX (Momentum Stability and Value).
DOOO shares were unchanged during premarket trading on Wednesday. DOOO shares have declined by -1.80% year-to-date compared to an 8.79% increase in the benchmark S&P 500 Index during the same time period.
Rashmi K. Kumari
Rashmi's passion for capital markets, financial regulation, and wealth management led her to pursue an investment analyst career. She has a master's in commerce and aspires, with her degree, to help individual investors understand complex financial issues.