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Bull of the Day: Malibu Boats (MBUU)

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Malibu Boats (MBUU - Free Report) is a Zacks #1 (Strong Buy) that operates as a designer, manufacturer and marketer of recreational powerboats. The company operates in three segments: Malibu, Cobalt and Saltwater Fishing. Its brands include, Axis, Maverick, Cobalt, Pursuit and Malibu, which are primarily used for recreational boating and fishing.

Like most stocks in 2022, it’s been a hard year for MBUU. However, the company recently reported a strong earnings beat, which has brought renewed buying interest for the stock. Estimates are now headed higher as the company is stepping up to supply chain challenges

About the Company

Malibu is headquartered in Loudon, Tennessee and was founded in 1982. The company operates through a network of independent dealers and employs over 2,600.

Malibu has a market cap of about $1.1 Billion and has Zacks Style Scores of “A” in Growth, Value and Momentum. The Forward PE is 7 and the company offers no dividend.

Q3 Earnings

Malibu reported earnings earlier this month, seeing a 34% beat. This surprise to the upside added to the winning streak of earnings beats for the company, who hasn’t missed since 2016.

Malibu Boats, Inc. Price and EPS Surprise

Malibu Boats, Inc. Price and EPS Surprise

Malibu Boats, Inc. price-eps-surprise | Malibu Boats, Inc. Quote

Revenues also came in above expectations, with the company reporting $344M v the $302M expected. Unit volumes were up 4.4% y/y and EBITDA margin went to 23.2% from 20.9% last year.

Malibu raised FY22 to 28-29% y/y and sees EBITDA margin approaching 20.5%.

Management said the company was able to ship more units than expected, in spite of the supply chain challenges across the industry. Malibu believes that their M&A strategy has become a competitive advantage and they have been able to expand their vertical integration model to give support to their brands and manufacturing. The company cites operational excellence as the reason for margin expansion, which has offset inflationary pressure.

Analysts Impressed with Q3

After earnings, analysts had some very positive comments and raised their estimates.

Truist commented on the record margins that propelled that Q3 beat. They added that production volumes outpaced their estimates and reiterated their Buy rating and $80 target.  

B.Riley also was impressed for the same reasons and says margin expansion bodes well for 2023. The firm has a Buy rating and a $103 price target, or 75% above current trading levels.

KeyBanc was another firm that reiterated its overweight target, but they did drop their PT to $80 from $94. This was due to macro reasons keeping investors on the sidelines for now, but they added the path of least resistance is higher when risk appetite shifts.


The positive quarter and outlook brought earnings estimates higher across the board. While the upcoming quarter have only seen slight adjustments, the numbers are spiking over the next couple years.

For the current year, estimates have jumped from $7.08 to $7.79 over the last 60 days. This is a 10% jump, which compares to the 8% hike for next year.

The Technicals

The stock took off in the back half of 2020, as consumers took their stimulus money and bought items like boats. The stock topped out at $93 in early 2021, but fell back under $50 just a month ago.

On that pullback under $50, the stock came into a 61.8% Fibonacci retracement drawn from the COVID lows to 2021 highs. This level just under $50 found support just before the stock spiked after earnings.

The bulls took the stock over $60, but got a little too excited. The stock was quickly sold, but found support at the 50-day moving average. The bulls now have control and will look to drive the stock higher, possibly up to the 200-day moving average at $65.

Bottom Line

Unlike many stocks out there, Malibu is seeing margin expansion and strong earnings. This makes it a rare commodity in a market where stocks have trouble going higher.

Malibu might see an above average move higher when money starts to flow into stocks again. Investors should watch for continued strength in the stock and get ready to pounce when the market turns.

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