Bull of the Day: MarineMax (HZO)
MarineMax (HZO) is a Zacks Rank #1 (Strong Buy) that is the nation's largest recreational boat and yacht retailer. The company sells new and used recreational boats, including pleasure boats, boats, and sport cruisers; mega-yachts, sport yachts, and other yachts; fishing boats; motor and convertible yachts; pontoon boats; fishing boats; ski boats; and jet boats.
MarineMax offers premium brands like Sea Ray, Meridian, Hatteras, Boston Whaler, Azimut Yachts, Nautique and more.
The stock fell apart in the January sell off. However, a recent earnings report has brought investors back into the surf.
More About HZO
The company was founded in 1998 and is headquartered in Clearwater, FL. MarineMax employs about over 2,600 people and sell its through offsite locations and print catalog. The company has 79 retail locations, typically by water, that are scattered throughout the U.S.
The company is valued at $1 billion and offers no dividend. HZO has Zacks Style Scores of “A” in Value and Growth, but “D” in Momentum. The Forward PE is under 6, which makes the stock attractive to value investors.
Failed Breakout
Back in December the stock was on verge of breaking out after a strong earnings report in late October. The stock rallied from the $48 level all the way to $60. Investors were hoping that a break there would help take it all the way back to the May highs when it hit $70.
But the January bears had different ideas. The market was sold aggressively and HZO fell to levels not seen since early 2021.
Earnings Beat
The stock struggled to rally off the January lows until earnings came along last week. MarineMax reported a Q1 beat of 43%, seeing $1.59 v the $1.13 expected. Revenues came in at $472.7M v the $448M expected. The company also raised FY22 guidance to $7.60-8.00 v the $7.43 expected. Same store sales where up 9% year over year, while margins dropped a tad quarter over quarter.
On the call, management cited accretive acquisitions, competitive advantage and consumer demand as reasons for the strong quarter. They added that they remain confident that their growth strategy will continue to enhance long-term shareholder value.
MarineMax, Inc. Price and EPS Surprise
MarineMax, Inc. price-eps-surprise | MarineMax, Inc. Quote
Estimates Looking Good
The strong earnings helped analysts take numbers higher for the year, but it looks like shorter-term estimates are falling. There has been some supply chain issues and analysts might be factoring that in. But looking over the next 12-24 months, the numbers look solid.
For the current year, estimates have gone from $7.43 to $7.88 over the last 7 days, a hike of 6%. For next year, we also see a 6% jump in estimates for that same time frame.
After earnings, Raymond James reiterated their Outperform rating and lifted their price target to $70. The firm cited a strong start to 2022, supply chain constraints easing, improving margins as reasoning. They added that MarineMax’s ability to gain market share in a healthy boat market as a basis for their Outperform rating.
The Technical Take
Like most stocks of late, HZO has broken a lot of technical support levels. After failing to break that $60 level, the bulls were chased out and there was no support at the 200-day MA at $52.
It then dropped to $40, where the stock found support. After the earnings beat, the stock popped almost 15%, moving from $42 to the $48 area. Since then, the stock has chopped around the $47 level.
Investors could enter at current levels and use those recent lows as a stop. If the stock breaks the 21-day at 49.75, some might look to add to the stock. The next resistance point will be $52, where the 200-day resides.
In Summary
MarineMax is doing fairly well despite the supply chain fears that are surrounding many industries. Demand is strong and the company is gaining market share.
Investors might look to build positions, while the market tries to stabilize. While the stock might be choppy at current levels, look for a green light over $50.
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