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Malibu Boats: Should Value Investors Consider MBUU Stock?

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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Malibu Boats, Inc. (MBUU - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Malibu Boats has a trailing twelve months PE ratio of 16.60, as you can see in the chart below:



This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.32. While Malibu Boats’ current PE level puts it slightly above its midpoint of 15.31 over the past few years, the current level stands much below the highs for the stock, indicating that it could be a solid entry point.



Further, the stock’s PE compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.80. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
 


We should also point out that Malibu Boats’ forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Malibu Boats has a P/S ratio of about 1.59. This is lower than the S&P 500 average, which comes in at 3.14 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.



Broad Value Outlook

In aggregate, Malibu Boats currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Malibu Boats a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for Malibu Boats is just 1.09, a level that is slightly lower than the industry average of 1.44. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, MBUU is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Malibu Boats might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘B’. This gives MBUU a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have somewhat encouraging. The current quarter has seen one upward and downward estimate revision each, in the past sixty days, while the full year estimate has seen five upward and no downward revisions in the same time period.

This has had a slightly positive impact on the consensus estimate, as the current quarter consensus estimate has been unchanged in the past two months, while the full year estimate has inched higher by 1.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Malibu Boats, Inc. Price and Consensus
 

Malibu Boats, Inc. Price and Consensus | Malibu Boats, Inc. Quote

However, this somewhat bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term. Nonetheless, the positive analyst sentiment hints at favorable near-term prospects.

Bottom Line

Malibu Boats is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. While this Zacks Rank #3 stock belongs to the Zacks categorized Leisure and Recreation Products industry that has underperformed the broader market in the last one year, the industry ranks among the Top 9% of the Zacks industries. This hints at favorable broader prospects, alongside signaling chances of revival.



So, value investors might want to wait for analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.

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