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Zacks Industry Outlook Highlights Malibu Boats, Callaway Golf and Vista Outdoor
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For Immediate Release
Chicago, IL – June 24, 2022 – Today, Zacks Equity Research discusses Malibu Boats, Inc. (MBUU - Free Report) , Callaway Golf Co. and Vista Outdoor Inc. (VSTO - Free Report) .
The Zacks Leisure and Recreation Products industry continues to benefit from strong demand for recreational products and the golf business. The industry participants, which design, market, retail, and distribute products for the outdoor and recreation market, are witnessing robust demand. Golf manufacturers and boating suppliers are witnessing robust demand.
The rise in fitness products sales owing to increasing awareness about health and fitness among people is favoring the industry. This, in turn, has been driving demand consistently. Stocks including Malibu Boats, Inc., Callaway Golf Co. and Vista Outdoor Inc. are likely to gain from the abovementioned industry trends.
Industry Description
The Zacks Leisure and Recreation Products industry comprises companies that provide amusement and recreational products, comprising swimming pools, marine products, golf courses, boat repair and maintenance services and other ancillary services, including indoor and outdoor storage and marine, as well as rental of boats and personal watercraft. Some of the industry participants manufacture outdoor equipment and apparel for climbing, mountaineering, backpacking and skiing.
Some companies provide connected fitness products and subscriptions for multiple household users. The industry players primarily thrive on overall economic growth, which fuels consumer demand for products. In fact, demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of Leisure and Recreation Products Industry
Boating Suppliers Witnessing Robust Demand: New boat sales have increased sharply amid the coronavirus pandemic. In fact, boat sales have been going through the roof since April-end 2020, and some dealers are hard-pressed to supply. Per National Marine Manufacturers Association (NMMA) reports, retail unit sales of new powerboats increased by 12% in 2020 compared with the prior year.
More than 310,000 new powerboats were sold in 2020, compared with 178,000 and 286,000 boats sold in the United States in 2010 and 2012, respectively. In fact, boat sales in the United States touched a 13-year high in 2020. In 2021, new powerboat sales surpassed 300,000 units for only the second time in 15 years. Although new powerboat sales in 2021 were 4% to 6% below record highs in 2020, it is 7% above the five-year sales average.
In 2021, first-time boat buyers accounted for 34% of boat sales. The uptrend is likely to continue in 2022. Per NMMA, new boat sales in 2022 are likely to surpass the 2021 figure by as much as 3%. According to the Marine Retailers Association of America, 95% of the boats in the world are made in the United States.
Booming Golf Business: The golf industry has been doing exceptionally well amid the pandemic. Golf has been benefiting from an increase in the participation of young people. Per Golf Datatech's 2020 National Golf Performance Report, rounds rose by 13.9% in 2020, while equipment sales increased 10.1%. The uptrend continued in 2021, with rounds played rising 5.5%.
While comparing 2021 to 2019 (pre-pandemic), rounds played increased nearly 18%. This gives an indication that the industry has been performing exceptionally well over the past two years. The golf industry has been gaining from strong participation from millennials. Technology has been playing a vital role in reshaping the sport of golf. Meanwhile, India and China have popped up as two of the largest emerging golf markets.
Economy Recovering: The industry is likely to benefit from the decline in the unemployment rate. In May, the unemployment rate remained steady at 3.6%. In the same month, 390,000 new jobs were created. This highlights that U.S. unemployment is back to its pre-pandemic levels. Average hourly earnings for May grew at a 0.3% rate, in line with the previous month but moderating a bit when we trace back over this strong period in the workforce.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Leisure and Recreation Products industry is grouped within the broader Consumer Discretionary sector.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.
The Leisure and Recreation Products industry currently carries a Zacks Industry Rank #24, which places it in the top 60% of more than 251 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential.
Before we present a few stocks from the industry that you may want to consider, let's take a look at the industry's recent stock market performance and valuation picture.
Industry Underperform the S&P 500
The Zacks Leisure and Recreation Products industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in this industry have collectively fallen 66.3% over the past year compared with the S&P 500's decline of 12.3%. The Zacks Consumer Discretionary sector has slumped 43% in the same time frame.
Valuation
On the basis of forward 12-month price-to-earnings, which is a commonly used multiple for valuing leisure products stocks, the industry trades at 14.27X compared with the S&P 500's 16.11X and the sector's 16.41X. Over the past five years, the industry has traded as high as 44.8X and as low as 12.36X, with the median being at 14.27X.
3 Leisure & Recreation Products Stocks to Watch
Malibu Boats: This Loudon, TN-based company operates as a designer, manufacturer and marketer of sport boats primarily in the United States. Strength at retail, robust cash flow generation and strong future demand are likely to benefit the company in fiscal 2022. Its strategic initiatives, operating plan, and robust product portfolio bode well.
In the past year, shares of this Zacks Rank #1 (Strong Buy) company have declined 29.9%. The Zacks Consensus Estimate for 2022 has been revised upward by 10% in the past 60 days. You can see the complete list of today's Zacks #1 Rank stocks here.
Callaway Golf: This Carlsbad, CA-based company designs, manufactures, and sells golf clubs and golf balls, apparel, gear, and other products. This Zacks Rank #2 (Buy) company has been gaining from strong demand for its golf equipment business. Robust demand for soft goods has been favoring the company.
The Zacks Consensus Estimate for current-quarter earnings has been revised upward to 80 cents from 76 cents in the past 30 days. The stock has appreciated 40.5% in the past year.
Vista Outdoor: This Anoka, MN-based company designs, manufactures, and markets several consumer products in the outdoor sports and recreation markets in the United States and internationally. This Zacks Rank #2 company has been benefiting from an increase in outdoor activity and shooting sports participation. Increased emphasis on product innovation and digital marketing, and e-commerce are likely to have bolstered the fiscal third-quarter top line.
Shares of the company have declined 35.5% in the past year. The Zacks Consensus Estimate for 2022 earnings has been revised upward by 10.5% in the past 30 days.
Why Haven't You Looked at Zacks' Top Stocks?
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Malibu Boats, Callaway Golf and Vista Outdoor
For Immediate Release
Chicago, IL – June 24, 2022 – Today, Zacks Equity Research discusses Malibu Boats, Inc. (MBUU - Free Report) , Callaway Golf Co. and Vista Outdoor Inc. (VSTO - Free Report) .
Industry: Leisure & Recreation
Link: https://www.zacks.com/commentary/1942721/3-leisure-recreation-products-stocks-to-boost-your-portfolio
The Zacks Leisure and Recreation Products industry continues to benefit from strong demand for recreational products and the golf business. The industry participants, which design, market, retail, and distribute products for the outdoor and recreation market, are witnessing robust demand. Golf manufacturers and boating suppliers are witnessing robust demand.
The rise in fitness products sales owing to increasing awareness about health and fitness among people is favoring the industry. This, in turn, has been driving demand consistently. Stocks including Malibu Boats, Inc., Callaway Golf Co. and Vista Outdoor Inc. are likely to gain from the abovementioned industry trends.
Industry Description
The Zacks Leisure and Recreation Products industry comprises companies that provide amusement and recreational products, comprising swimming pools, marine products, golf courses, boat repair and maintenance services and other ancillary services, including indoor and outdoor storage and marine, as well as rental of boats and personal watercraft. Some of the industry participants manufacture outdoor equipment and apparel for climbing, mountaineering, backpacking and skiing.
Some companies provide connected fitness products and subscriptions for multiple household users. The industry players primarily thrive on overall economic growth, which fuels consumer demand for products. In fact, demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of Leisure and Recreation Products Industry
Boating Suppliers Witnessing Robust Demand: New boat sales have increased sharply amid the coronavirus pandemic. In fact, boat sales have been going through the roof since April-end 2020, and some dealers are hard-pressed to supply. Per National Marine Manufacturers Association (NMMA) reports, retail unit sales of new powerboats increased by 12% in 2020 compared with the prior year.
More than 310,000 new powerboats were sold in 2020, compared with 178,000 and 286,000 boats sold in the United States in 2010 and 2012, respectively. In fact, boat sales in the United States touched a 13-year high in 2020. In 2021, new powerboat sales surpassed 300,000 units for only the second time in 15 years. Although new powerboat sales in 2021 were 4% to 6% below record highs in 2020, it is 7% above the five-year sales average.
In 2021, first-time boat buyers accounted for 34% of boat sales. The uptrend is likely to continue in 2022. Per NMMA, new boat sales in 2022 are likely to surpass the 2021 figure by as much as 3%. According to the Marine Retailers Association of America, 95% of the boats in the world are made in the United States.
Booming Golf Business: The golf industry has been doing exceptionally well amid the pandemic. Golf has been benefiting from an increase in the participation of young people. Per Golf Datatech's 2020 National Golf Performance Report, rounds rose by 13.9% in 2020, while equipment sales increased 10.1%. The uptrend continued in 2021, with rounds played rising 5.5%.
While comparing 2021 to 2019 (pre-pandemic), rounds played increased nearly 18%. This gives an indication that the industry has been performing exceptionally well over the past two years. The golf industry has been gaining from strong participation from millennials. Technology has been playing a vital role in reshaping the sport of golf. Meanwhile, India and China have popped up as two of the largest emerging golf markets.
Economy Recovering: The industry is likely to benefit from the decline in the unemployment rate. In May, the unemployment rate remained steady at 3.6%. In the same month, 390,000 new jobs were created. This highlights that U.S. unemployment is back to its pre-pandemic levels. Average hourly earnings for May grew at a 0.3% rate, in line with the previous month but moderating a bit when we trace back over this strong period in the workforce.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Leisure and Recreation Products industry is grouped within the broader Consumer Discretionary sector.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.
The Leisure and Recreation Products industry currently carries a Zacks Industry Rank #24, which places it in the top 60% of more than 251 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential.
Before we present a few stocks from the industry that you may want to consider, let's take a look at the industry's recent stock market performance and valuation picture.
Industry Underperform the S&P 500
The Zacks Leisure and Recreation Products industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in this industry have collectively fallen 66.3% over the past year compared with the S&P 500's decline of 12.3%. The Zacks Consumer Discretionary sector has slumped 43% in the same time frame.
Valuation
On the basis of forward 12-month price-to-earnings, which is a commonly used multiple for valuing leisure products stocks, the industry trades at 14.27X compared with the S&P 500's 16.11X and the sector's 16.41X. Over the past five years, the industry has traded as high as 44.8X and as low as 12.36X, with the median being at 14.27X.
3 Leisure & Recreation Products Stocks to Watch
Malibu Boats: This Loudon, TN-based company operates as a designer, manufacturer and marketer of sport boats primarily in the United States. Strength at retail, robust cash flow generation and strong future demand are likely to benefit the company in fiscal 2022. Its strategic initiatives, operating plan, and robust product portfolio bode well.
In the past year, shares of this Zacks Rank #1 (Strong Buy) company have declined 29.9%. The Zacks Consensus Estimate for 2022 has been revised upward by 10% in the past 60 days. You can see the complete list of today's Zacks #1 Rank stocks here.
Callaway Golf: This Carlsbad, CA-based company designs, manufactures, and sells golf clubs and golf balls, apparel, gear, and other products. This Zacks Rank #2 (Buy) company has been gaining from strong demand for its golf equipment business. Robust demand for soft goods has been favoring the company.
The Zacks Consensus Estimate for current-quarter earnings has been revised upward to 80 cents from 76 cents in the past 30 days. The stock has appreciated 40.5% in the past year.
Vista Outdoor: This Anoka, MN-based company designs, manufactures, and markets several consumer products in the outdoor sports and recreation markets in the United States and internationally. This Zacks Rank #2 company has been benefiting from an increase in outdoor activity and shooting sports participation. Increased emphasis on product innovation and digital marketing, and e-commerce are likely to have bolstered the fiscal third-quarter top line.
Shares of the company have declined 35.5% in the past year. The Zacks Consensus Estimate for 2022 earnings has been revised upward by 10.5% in the past 30 days.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.