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Why MarineMax Stock Was Sinking Today

Jeremy Bowman, The Motley Fool

What happened 

Shares of MarineMax (NYSE: HZO) were taking on water today after the country's largest recreational boat retailer posted disappointing bottom-line results in its second-quarter earnings report and lowered its full-year guidance. As a result, the stock was down 19.6% as of 3:16 p.m. EDT.

So what 

MarineMax actually showed strong top-line growth in the quarter as comparable sales increased 12%, driving revenue up 12% to $303.6 million, which topped estimates of $290.6 million. 

A MarineMax boat in a dock

Image source: MarineMax.

Still, the company noted that performance was impacted by inclement weather, as many of its markets faced harsh winters, and said that it had to increase spending to drive sales growth.

Gross margin in the period fell from 25.6% a year ago to 24.4%, and operating income actually declined from $10.6 million to $10.2 million. Earnings per share came in at $0.23, missing expectations of $0.31, and was also down from an adjusted total of $0.25 a year ago.

CEO Brett McGill summed up the quarter, saying:

Our team succeeded in driving strong sales growth in the quarter, even as we and the industry incurred challenges that included rougher than normal winter weather in many of our markets. Based on preliminary industry data, we believe our same-store sales performance in the quarter drove continued market share gains. Our proactive decision to invest to capture additional sales impacted both our margins and profitability.

Now what

McGill also said that the company was in a strong position heading into the peak selling months with the right products in stock and a large on-order backlog. 

Nonetheless, the company still cut full-year earnings guidance to $1.75-$1.85 from $1.85-$1.95, though that seems mostly due to the struggles in the second quarter. Considering that MarineMax's top-line growth remains solid, today's sell-off seems exaggerated. With the stock trading at a P/E ratio of just 8.8 based on the midpoint of this year's earnings guidance, today's drop looks like an attractive buying opportunity.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.