OneWater Marine ONEW, a premium boat retailer, is trading in a steep down trend, punctuated by dismal guidance from management, falling earnings estimates, and compressing margins. These developments have led analysts to revise earnings estimates lower, giving OneWater Marine a Zacks Rank #5 (Strong Sell) rating.
Falling Earnings Estimates
Earnings estimates have been revised considerably lower over the last two months. Current quarter earnings estimates have been lowered by -73% and are projected to fall -66% YoY to $0.43 per share. FY23 earnings estimates have been revised lower by -37% and are forecast to decline -50% YoY to $4.58 per share.
Highlighting a bright spot for the boat retailer is that sales growth is expected to remain marginally positive this year and next, which is better than some of its competitors expect. Nonetheless, the industry is expected to see headwinds going forward.
Bearish Technical Pattern
After gapping down more than -30% following the bleak Q3 earnings report, ONEW stock has remained under pressure. The price action isn’t encouraging as a bearish wedge has formed in the chart, and a breakdown on Tuesday indicates there may be further downside action ahead.
Valuation
OneWater Marine is trading at a one year forward earnings multiple of 5.4x, which is in line with its historical median, and well below the industry average of 24.8x.
Bottom Line
The leisure and recreation industry currently sits in the bottom 3% (237 out of 245) of the Zacks Industry Rank, showing a broad weakness in the segment. After the incredible boom period following the Covid-19 pandemic, it seems a lot of consumer spending, especially big-ticket items like boats was pulled forward a couple years. However, there will be a time in the future where demand for ONEW products again picks up, and the stock will again be worth considering. But until those earnings estimates begin to trend higher, I would avoid the stock.
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OneWater Marine ONEW, a premium boat retailer, is trading in a steep down trend, punctuated by dismal guidance from management, falling earnings estimates, and compressing margins. These developments have led analysts to revise earnings estimates lower, giving OneWater Marine a Zacks Rank #5 (Strong Sell) rating.
Falling Earnings Estimates
Earnings estimates have been revised considerably lower over the last two months. Current quarter earnings estimates have been lowered by -73% and are projected to fall -66% YoY to $0.43 per share. FY23 earnings estimates have been revised lower by -37% and are forecast to decline -50% YoY to $4.58 per share.
Highlighting a bright spot for the boat retailer is that sales growth is expected to remain marginally positive this year and next, which is better than some of its competitors expect. Nonetheless, the industry is expected to see headwinds going forward.
Bearish Technical Pattern
After gapping down more than -30% following the bleak Q3 earnings report, ONEW stock has remained under pressure. The price action isn’t encouraging as a bearish wedge has formed in the chart, and a breakdown on Tuesday indicates there may be further downside action ahead.
Valuation
OneWater Marine is trading at a one year forward earnings multiple of 5.4x, which is in line with its historical median, and well below the industry average of 24.8x.
Bottom Line
The leisure and recreation industry currently sits in the bottom 3% (237 out of 245) of the Zacks Industry Rank, showing a broad weakness in the segment. After the incredible boom period following the Covid-19 pandemic, it seems a lot of consumer spending, especially big-ticket items like boats was pulled forward a couple years. However, there will be a time in the future where demand for ONEW products again picks up, and the stock will again be worth considering. But until those earnings estimates begin to trend higher, I would avoid the stock.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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