Brunswick (BC) is a leading global manufacturer and marketer of recreational marine products, known for its portfolio of well-regarded brands in boating, engines, and marine technology. Its products range from boats and marine engines to advanced navigation systems, catering to both recreational and professional boating enthusiasts.
While Brunswick remains a leader in its respective industry, the boating industry is not expected to do well in the near future, with sales and earnings projected to stagnate. Reflecting this reality, Brunswick has a Zacks Rank #5 (Strong Sell) rating, while its stock and the sector more broadly have performed poorly year-to-date.
Further increasing the risks of owning the stock are a valuation that remains well above its historical averages. Thus, based on this unfavorable setup, I think investors should avoid Brunswick stock and seek other opportunities until the data improves.
Image Source: Zacks Investment Research
Brunswick Earnings Estimates Crater
The recreational boating industry is not expected to do well over the next year, as it seems years of purchases were brought forward following the post-Covid boom. Current quarter earnings estimates have been revised lower by 41.3% and are expected to fall 62.7% YoY, while FY24 estimates have declined by 6.7% and are projected to fall 44.2% YoY.
Brunswick’s Earnings ESP is especially concerning, with the indicator forecasting earnings at the next quarterly report to miss estimates by a whopping 45.56%. Over the last four earnings reports, BC has missed earnings estimates by an average of 4.88%.
Image Source: Zacks Investment Research
Yet BC Still has a Premium Valuation
Even with the falling stock price and poor outlook, Brunswick still has a premium valuation. Today, it is trading at a one year forward earnings multiple of 18.2x, which is below the market average, but well above its 10-year median of 13.1x.
With both sales and earnings expected to fall this year, a premium valuation like this increases the downside risk of owning the stock.
Image Source: Zacks Investment Research
Should Investors Buy Brunswick Shares?
Given the significant downward revisions in earnings estimates and a high valuation relative to its historical averages, Brunswick presents considerable risk to investors. The post-COVID demand surge appears to have pulled forward boat purchases, leaving the industry with stagnant growth prospects in the near term. Brunswick’s Zacks Rank #5 (Strong Sell) underscores this challenging outlook, with earnings expected to decline substantially year-over-year.
Until industry fundamentals show signs of recovery and Brunswick’s valuation aligns with its growth outlook, it may be wise for investors to seek alternative opportunities in more resilient sectors.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>Brunswick Corporation (BC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
%20%7C%20Nasdaq&_biz_n=11&rnd=807695&cdn_o=a&_biz_z=1743711939142)
%20%7C%20Nasdaq&_biz_n=12&rnd=913991&cdn_o=a&_biz_z=1743711939255)
%20%7C%20Nasdaq&_biz_n=13&rnd=868911&cdn_o=a&_biz_z=1743711939255)
%20%7C%20Nasdaq&_biz_n=14&rnd=596791&cdn_o=a&_biz_z=1743711939255)
%20%7C%20Nasdaq&rnd=228159&cdn_o=a&_biz_z=1743711939259)