DENVER — After conducting a survey of 185 boat dealers and holding discussions with key industry contacts, RBC Capital Markets Analyst Edward Aaron says he sees signs of a recovery taking hold.
“Inventories have been purged, product margins are improving, and an active
pre-owned and service market provides evidence of a more engaged consumer,” he said in a recent investor note. He also noted that while still not great, dealer sentiment is on the upswing.
On the negative side, Aaron points out that new boat sales have been slow to recover, especially when discounts are withdrawn.
“We attribute this to an overhang of good-condition pre-owned inventory and the effects of an extremely tight floorplan financing market,” Aaron said in the note. “These issues are likely to correct with time.”
Given his findings, Aaron predicts positive news when Brunswick reports its first-quarter results on Thursday.
“We expect management to reiterate its expectations for full-year retail sales,” Aaron said in the note. “With production increasing for the first time in several years, we expect that Brunswick’s P&L will show strong leverage. While we do not have a strong view of how the stock will perform around the quarter given the recent run, we believe investors will come away encouraged by the direction of the business.”
To read the complete report, click here.