Which leisure boating stock represents an ideal investment opportunity? The pandemic has fueled an uptick in boat sales, with 100 million Americans now participating in boating annually. New boat sales spiked by 40% between 2019 and 2020, with a 35% increase in first-time boat owners.
Even with a shift back to more regular boat sales patterns and cautious consumer spending, Grand View Research projects over 5% annual growth for the global leisure boat market through 2030.
Considering these factors, let’s analyze two recreational boating stocks to identify the more promising investment.
Assessing MarineMax
Identified as the “world’s largest lifestyle retailer of recreational boats and yachts, as well as yacht concierge and superyacht services,” MarineMax (NYSE: HZO) functions across diverse segments of the boating industry. MarineMax caters to recreational boaters’ requirements, ranging from boat purchases to yacht charters and marina docking for maintenance.
The recent acquisition of IGY Marinas emerged as a fiscal highlight in the second quarter for MarineMax. Having been acquired last October, IGY manages 23 high-end marinas globally and has been “outperforming expectations,” according to MarineMax CFO Michael McLamb.
IGY Marinas’ contribution helped MarineMax achieve a record second-quarter gross margin of 35.2%. Furthermore, other high-margin revenue sectors like superyacht brokerage, charter, and concierge services demonstrated robust performance last quarter.
Nevertheless, despite the positive performance in high-end segments, MarineMax’s second-quarter revenue of $570 million indicated a 7% year-over-year decline. The leading cause was a 13% drop in same-store sales, propelled by what CEO Brett McGill attributed to “the boating industry’s return to seasonality amid growing macroeconomic uncertainty.”
However, considering MarineMax’s outstanding performance in 2022, the year-over-year decline in the second quarter isn’t overly concerning. Last quarter’s revenue total marks the company’s second-highest in its second-quarter history, exhibiting an 88% increase compared to $304 million in the same period in 2019.
Evaluating Marine Products
Marine Products (NYSE: MPX) designs, produces and sells recreational sport fishing, wake surfing, and waterskiing boats. After recording $119 million in sales last quarter, the Atlanta-based firm has restocked its dealer inventories ahead of the peak retail selling season.
A well-managed supply chain, including internal transportation capabilities, powered record first-quarter sales for Marine Products. First-quarter revenue of $119 million represented a 55% year-over-year surge, and net income rose to $11.6 million, a 64% increase from the first quarter of 2022.
Operational costs increased last quarter, including a 57% rise in selling, general, and administrative expenses. Nevertheless, price increases and manufacturing efficiencies helped counterbalance inflation and supply chain-related costs, leading to a slight gross margin gain as a percentage of net sales, ending at 24.4%.
Marine Products Corporation is still navigating supply chain challenges; as CEO Ben Palmer stated, “Our logistical issues and availability of materials and components continue to improve, although we are still experiencing sporadic shortages of certain manufactured components.”
One significant data point from Marine Products’ first-quarter performance was its international sales growth, which rose by 89% year over year. Although global sales currently only represent 7% of Marine Products’ sales, keep an eye on this segment for potential market share expansion.
Which stock is the superior buy presently?
To better assess which marine stock is the more attractive long-term investment,
We’ve compared their price-to-earnings (P/E), price-to-sales (P/S), and price-to-book (P/B) ratios.
MarineMax, with significantly lower P/E, P/S, and P/B ratios, is today’s clear front-runner. It also boasts a more diversified business, possibly offering increased stability. However, as the leisure boating industry thrives, both stocks will likely benefit from the rising tide.
MarineMax and Marine Products present viable investment opportunities in the prosperous leisure boating industry; MarineMax holds the edge, offering more attractive financial ratios and a diverse business model. However, it’s crucial to keep in mind that the dynamics of the market can change, and the long-term success of any investment largely depends on industry trends and company performance over time. Always do your due diligence and consider your risk tolerance before investing.
