We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Malibu Boats (MBUU - Free Report) is a Zacks Rank #5 (Strong Sell) that designs, engineers, manufactures, markets, and sells a range of recreational powerboats.
The stock is trading at 52-week lows after a recent earnings report. While the company beat on earnings, its outlook was stormy.
The consumer remains strong, but they have shifted to spending on smaller everyday items instead of big-ticket items like boats. For this reason, investors and the company look to be cautious going into 2024.
About the Company
Malibu was founded in 1982 and is headquartered in London, Tennessee.The company sells its products through independent dealers and employs over 3,000 people.
The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands.
Malibu is valued at $800 million and has a Forward PE of 8. The stock holds Zacks Style Scores of “B” in Value and Growth, and “A” in Momentum. The stock pays no dividend.
Q4 Earnings
Malibu reported in late October, beating EPS by 24%. The company is used to beating expectations as they have not missed since 2016.
However, management reduced its FY24 outlook as they no longer see improvement in retail trends in 2H. The company sees net sales declining in the high teens/low 20% range vs. down mid-/high teens prior. EBITDA margins are now expected to contract 350-450bps from last year.
Analyst commentary says consumers are backing away with higher interest rates. While market share is still there for Malibu, only the cash buyers for higher end boats are outperforming. The credit buyers look to be on the sidelines until interest rates come in.
Estimates
Analysts have been cutting estimates since earnings and the lower guidance.
Over the last 30 days, numbers for the current quarter plunged from $1.12 to $0.51 or 66%.
For the current year, analysts have lowered estimates 13% over that same time frame.
Looking at the longer term, numbers are trending lower as well. For next year, estimates have fallen from $7.47 to $6.27 over the last 90 days, or almost 16%.
Technical Take
While the S&P is up 15% on the year MBUU is down 20% in 2023. This underperformance is a consequence of higher interest rates taking demand away. And when you look at the chart, you can see the MBUU breakdown happened when interest rates started to spike late in the summer.
The stock has broken the 2022 lows and a 61.8% Fibonacci retracement drawn from COVID lows to highs.
The next support area is $40, but if that fails the stock had risk down to $34.
Any bounce will likely be sold. Investors can look for the 50-day moving average at $47.50. The 200-day MA is at $54.50 and likely won’t be tested unless there is a fundamental change in the current earnings situation.
In Summary
Malibu is going to have trouble over the next six months as consumer demand weakens into the off season. While the interest rate situation looks to be improving over that time frame, the company does not see demand coming back quickly.
Investors interested in the name should watch for a pivot in rates and increased demand for higher end items. Until then, those interested in the space could look at Acushnet Holdings (GOLF - Free Report) . The stock is a Zacks Rank #3 (Hold) and has been trading higher after reporting a 57% EPS beat.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bear of the Day: Malibu Boats (MBUU)
Malibu Boats (MBUU - Free Report) is a Zacks Rank #5 (Strong Sell) that designs, engineers, manufactures, markets, and sells a range of recreational powerboats.
The stock is trading at 52-week lows after a recent earnings report. While the company beat on earnings, its outlook was stormy.
The consumer remains strong, but they have shifted to spending on smaller everyday items instead of big-ticket items like boats. For this reason, investors and the company look to be cautious going into 2024.
About the Company
Malibu was founded in 1982 and is headquartered in London, Tennessee.The company sells its products through independent dealers and employs over 3,000 people.
The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands.
Malibu is valued at $800 million and has a Forward PE of 8. The stock holds Zacks Style Scores of “B” in Value and Growth, and “A” in Momentum. The stock pays no dividend.
Q4 Earnings
Malibu reported in late October, beating EPS by 24%. The company is used to beating expectations as they have not missed since 2016.
However, management reduced its FY24 outlook as they no longer see improvement in retail trends in 2H. The company sees net sales declining in the high teens/low 20% range vs. down mid-/high teens prior. EBITDA margins are now expected to contract 350-450bps from last year.
Analyst commentary says consumers are backing away with higher interest rates. While market share is still there for Malibu, only the cash buyers for higher end boats are outperforming. The credit buyers look to be on the sidelines until interest rates come in.
Estimates
Analysts have been cutting estimates since earnings and the lower guidance.
Over the last 30 days, numbers for the current quarter plunged from $1.12 to $0.51 or 66%.
For the current year, analysts have lowered estimates 13% over that same time frame.
Looking at the longer term, numbers are trending lower as well. For next year, estimates have fallen from $7.47 to $6.27 over the last 90 days, or almost 16%.
Technical Take
While the S&P is up 15% on the year MBUU is down 20% in 2023. This underperformance is a consequence of higher interest rates taking demand away. And when you look at the chart, you can see the MBUU breakdown happened when interest rates started to spike late in the summer.
The stock has broken the 2022 lows and a 61.8% Fibonacci retracement drawn from COVID lows to highs.
The next support area is $40, but if that fails the stock had risk down to $34.
Any bounce will likely be sold. Investors can look for the 50-day moving average at $47.50. The 200-day MA is at $54.50 and likely won’t be tested unless there is a fundamental change in the current earnings situation.
In Summary
Malibu is going to have trouble over the next six months as consumer demand weakens into the off season. While the interest rate situation looks to be improving over that time frame, the company does not see demand coming back quickly.
Investors interested in the name should watch for a pivot in rates and increased demand for higher end items. Until then, those interested in the space could look at Acushnet Holdings (GOLF - Free Report) . The stock is a Zacks Rank #3 (Hold) and has been trading higher after reporting a 57% EPS beat.