In September 2018, MarineMax, Inc. (NYSE:HZO) released its latest earnings announcement, which indicated that the business experienced a sizeable tailwind, leading to a high double-digit earnings growth of 67%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive MarineMax’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for the upcoming year seems buoyant, with earnings rising by a robust 14%. This growth seems to continue into the following year with rates arriving at double digit 27% compared to today’s earnings, and finally hitting US$69m by 2021.
While it’s informative knowing the growth rate each year relative to today’s level, it may be more valuable to estimate the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a better picture of the direction of MarineMax’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 14%. This means, we can expect MarineMax will grow its earnings by 14% every year for the next few years.
For MarineMax, I’ve put together three essential aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is HZO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HZO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HZO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.