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Bear of the Day: MarineMax (HZO)

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MarineMax, Inc. (HZO - Free Report) is facing headwinds in fiscal 2024 as the market for recreational boats and yachts remains challenging. This Zacks Rank #5 (Strong Sell) recently lowered its full year earnings guidance.

MarineMax is the largest lifestyle retailer of recreational boats and yachts, as well as yacht concierge and superyacht services. It has 130 locations worldwide, including 81 dealerships and 66 marina and storage facilities.

The business includes IGY Marinas, which operates luxury marinas in yachting and sport fishing destinations around the world; Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services companies; Cruisers Yachts, one of the world’s premier manufacturers of premium sport yachts and motor yachts; and Intrepid Powerboats, a premier manufacturer of powerboats.

An Earnings Miss in the Fiscal First Quarter of 2024

On Jan 25, 2024, MarineMax announced its fiscal first quarter 2024 results and missed on the Zacks Consensus Estimate by 66%. Earnings were just $0.19 compared to the Zacks Consensus of $0.56.

However, it saw record revenue for the first quarter of $527.3 million, up 4% year-over-year, as same-store sales rose 4% driven by higher new and used boat sales.

MarineMax's gross profit margin declined 350 basis points to 33.3% from 36.8% last year due to a more aggressive promotional environment. It had to discount certain boat models and it also sold a greater mix of larger boats, which normally have lower gross profit margins.

However, it's still looking for growth in fiscal 2024.

"This month, we announced the planned acquisition of Williams Tenders USA, the exclusive distributor in the United States and the Caribbean for the premier brand of rigid inflatable jet tenders for the luxury yacht market," said Brett McGill, CEO.

"The growth of the yacht and luxury yacht markets represents a tailwind for our business as we advance our strategic priorities," he added.

Lowered Earnings Guidance for Fiscal 2024

MarineMax has grown bearish due to the market challenges. It lowered its full year fiscal 2024 earnings guidance to a range of $3.20 to $3.70 from its prior guidance range of $4.50 to $5.00 provided when it reported fourth quarter and full year fiscal 2023 results on Oct 26, 2023.

As a result, the analysts have cut their estimates too. 2 estimates have been cut for fiscal 2024 in the last 7 days, pushing down the Zacks Consensus Estimate to $3.96 from $4.56. That's still above the guidance range, however.

But it's a decline of 24% from last fiscal year, which saw earnings of $5.21.

Zacks Investment Research
Image Source: Zacks Investment Research

Shares Plunge on the Guidance Cut

MarineMax shares have been on a roller coaster over the prior year, but got hit hard when the guidance was cut. Over the last month, shares fell 28.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

It's cheap, with a forward P/E of just 7.2.

But will the boat market slow further in 2024? Investors might want to stay on the sidelines until there is a turnaround in earnings estimates.

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