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Bear of the Day: OneWater Marine (ONEW)

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OneWater Marine (ONEW - Free Report) , 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.

Zacks Investment Research
Image Source: Zacks Investment Research

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.

Image Source: TradingView


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.

Zacks Investment Research
Image Source: Zacks Investment Research

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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