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Bull of the Day: MCBC Holdings (MCFT)

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MCBC Holdings Inc. (MCFT - Free Report) is a company that designs, manufactures, and markets the MasterCraft brand of premium performance sport boats; it also owns boat company Nautic Star. Headquartered in Vonore, TN, it also offers skiing, wakeboarding, and luxury performance powerboats.

MCBC has been making since 1968, and sells its products in over 30 countries, with more than 130 domestic and international dealers.

MasterCraft has a huge presence in the tournament ski boat market, and thanks to its unique design, produces thousands of tournament ski, wakeboarding, and luxury and performance boats per year to keep up with demand.

Solid Second Quarter Results

MCBC beat the Zacks Consensus Estimate on both the top and bottom line, reporting revenues of 78.4 million and diluted earnings of 43 cents per share.

Revenues surged over 53% year-over-year primarily due to the inclusion of Nautic Star—MCBC acquired the company back in October 2017—as well as an increase in MasterCraft unit sales volume, favorable product mix, and price increases.

However, gross margin declined 250 basis points to 25.4%, from 27.9% in the prior year period, due to the addition of Nautic Star; its gross margin was in the high teens.


MCBC expects the Tax Cuts and Jobs Act to add 20 cents per share to its full-year fiscal 2018 adjusted EPS guidance.

Net sales growth should now be in the high 30-percent range for the year, while adjusted EBTDA margins are expected to be in the high 17-percent range.

For the upcoming third quarter, MCBC expects net sales growth in the low 50-percent range and adjusted EBITDA margin to be above 17 percent.

Estimates on the Rise

For MCBC, its bottom line is trending upward for the foreseeable future.

Earnings are expected to grow nearly 68% for the current quarter. Six analysts have revised their estimates upwards in the last 60 days, and none have cut their outlook in the same time period.

Fiscal 2018 figures are also looking pretty promising, with seven estimates moving higher in the past two months. The Zacks consensus estimate trend has jumped from $1.61 per share to $1.83 per share.

Earnings estimates for 2019 are on the rise as well, jumping from $1.84 per share to $2.22 per share in the last 60 days.

Can MCFT Push Higher?

Shares of MCBC have gained about 15% since the start of the year, and 60% in the past one-year period. In comparison, the S&P has returned roughly 1.5% and 14%, respectively.

The company is currently trading at a forward P/E of 14.3X and has a PEG ratio of 0.93X.

MCBC is also a part of a well-performing industry. Leisure and Recreation Products sits in the top 13% of all industries ranked by Zacks and has seen a modest 6.7% year-to-date return.

When consumers feel confident about the economy, they tend to treat themselves to various things, from vacations to new cars, and yes, even boats; MCBC and its MasterCraft brand has certainly benefitted from this wave of consumer confidence.

Taking that into account, along with its strong growth and value metrics, MCFT looks to be an exciting opportunity for investors.

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