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Brunswick Corp (BC US) $US46.36

BC is the world’s largest marine company, and while the Brunswick brand itself is not well known, it owns many brands that are, including Mercury outboards, Bayliner, Sea Ray and Boston Whaler boats. We’ve owned the stock in the past, having exited early in 2024 around $US84. It’s been a tough time for the stock since, and the share price is now ~40% lower. Analysts have been consistently lowering earnings forecasts on weak consumption data amplified more recently by uncertainties on trade policy, the direct and indirect impact of these uncertainties on consumers, the weakening $US dollar, and persistently high interest rates.

  • Consensus expectations imply earnings of $US220m in FY25, down from $US308m in FY24, before they start to grow again in FY26, however, as the company itself notes, there is a high level of unpredictability in what earnings will be.

On a more positive note, they reported 1Q25 earnings last week, and while they cut their FY25 guidance, it remained above bearish expectations. They now expect adjusted EPS $US2.50 to $4.00, down from $US3.50 to $5, on sales of $US5.0 billion to $5.4 billion, down from $US5.2 billion to $5.6 billion. Based on these forecasts, the stock trades on ~14x FY25 earnings.

It does look too early to be buying the stock now, however, BC will be a significant beneficiary of trade policy certainty, overlayed by lower interest rates, as long as the US does not go into recession.

  • This is a wait-and-watch stock for now, though we will keep a close eye on it as a likely beneficiary when trade uncertainties are resolved, and particularly if we get a better economic outcome in the US. The stock could easily trade significantly higher given its leverage to the consumer.

NB: Other boat retailers like MarineMax and Malibu Boats have also been hit hard. MarineMax just reported better-than-expected quarterly results, while Malibu reports on the 8th of May.

MM is adding BC US to the International Equities Hitlist
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Brunswick Corp (BC US)
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