Finance fishing boats

Bull of the day: MarineMax (HZO)


MarineMax (HZO) is a Zacks Rank # 1 (Strong Buy) which is the nation’s largest pleasure craft and yacht retailer. The company sells new and used pleasure boats, including pleasure craft, pleasure boats, mega-yachts, sport yachts, fishing boats, pontoons, motor boats, boats ski and jet boats.

MarineMax offers premium brands such as Sea Ray, Boston Whaler, Meridian, Hatteras, Azimut Yachts, Nautique and more.

The stock traded sideways for most of the summer. But after a recent earnings report that surprised to the upside, the stock is on the rise.

Learn more about HZO

The company was founded in 1998 and is headquartered in Clearwater, Florida. MarineMax employs approximately 1,500 people and sells through offsite sites and a print catalog. The company has 77 outlets, mostly by water, scattered throughout the United States.

The company is valued at $ 1.2 billion and offers no dividends. HZO has Zacks style scores of “A” in value and growth, but “C” in momentum. The Forward PE is less than 8, which makes the stock attractive to value investors.

Summer on the side

Like many stocks in recent months, HZO has seen some sell off its spring highs due to supply chain fears. The disruptions in the supply chain caused inventory problems, which worried investors. The question is not about consumer demand, but rather about a company’s ability to deliver the products.

Beat gains

MarineMax allayed many concerns when it announced 25% EPS at the end of October. The company saw the third quarter at $ 1.41 vs. $ 1.27 expected, while revenue was $ 1.19 billion vs. $ 1.15 billion expected. The company also raised its forecast for fiscal year 21 and confirmed its margins for fiscal year 21.

All four of the business segments, except one, experienced year-over-year growth. Maritime revenues increased by 25%, aviation by 19% and fitness by 4%. The laggard was the Outdoor segment, which was down 3% year over year.

Management cited strong demand for active lifestyle products as the reason for the record third quarter consolidated sales.

Rising estimates

Strong earnings helped analysts push the numbers up across the board. For the next quarter, estimates have risen from $ 1.64 to $ 1.81 in the past 30 days, an increase of 10%. For the current year, we see a 9% jump in estimates for the same period.

After earnings, Wedbush said that “record gross margins far exceed the plagued SSS in the supply chain.” So the improvement in the margin is what made the quarter. Wedbush says demand for boats is expected to benefit sustainably from the surge that began during the pandemic.

MarineMax, Inc. Price and EPS Surprise

MarineMax, Inc. Price and EPS Surprise

MarineMax, Inc. price-eps-surprise | MarineMax, Inc. Quote

The technical socket

As sales took off during the COVID pandemic, so did the stock. HZO fell below $ 10 in March 2020, but then quickly took off, hitting highs of over $ 70 last April.

From there, the stock sold and fell more than 35%, settling into the $ 45 zone. The stock traded sideways around the $ 50 mark for about six months. Meanwhile, moving averages flattened, but investors held on to the HZO, despite some 200-day moving average breaks.

Since the profits, the stock has started to rise. Investors are coming back and HZO is now above all moving averages. Additionally, the stock is defying July highs and a move above that level could trigger a breakout.

Investors should look for this $ 55 area as the first point of resistance, then consider $ 61 as the next important test. Above that level, we could see the stock attempting to reach all-time highs again next year.

In summary

Boating is in demand thanks to the COVID-19 pandemic. People have explored new ways to vacation and get out of their homes, which have benefited the camping and boating industries. Of course, all that stimulus money has helped, but demand doesn’t seem to be waning.

In addition, the company effectively manages supply chain disruptions. The margins posted by the company have impressed Wall Street and will attract new investors.

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