Nine analysts have increased their EPS estimates for this quarter for this recreational product maker in the last 30 days. The shares of the company recently crossed over their 50-day moving average, a bullish indicator.
Brunswick Corporation (BC)
From Upside
Brunswick Corporation (BC) offers solid profit-growth prospects, an attractive valuation, and the potential for strong capital appreciation over the next 12 months.
The company sells marine engines (50% of 2015 sales), pleasure boats (31%), and fitness equipment (19%). Notable brands include Mercury engines and Bayliner boats. The fitness-equipment unit, which sells the Life Fitness brand, also includes the nation’s leading maker of billiard tables. Brunswick’s first tables were introduced in 1845.
Solid job growth, low interest rates, and cheap fuel prices have contributed to healthy marine-related sales in recent quarters.
Recent share-price action reflects a dose of skepticism, partly on concerns about boat demand in foreign markets. But, at 16 times trailing earnings, Brunswick trades 21% below the median for S&P 1500 leisure stocks.
Consensus estimates call for per-share profit growth of 18% for 2016, and 15% next year. Assuming Brunswick hits the lowest of the 2016 estimates (which implies healthy 17% growth) and its P/E ratio moves to the five-year average of 17, shares would be worth $58, up 21%.
Brunswick, yielding 1.25%, is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, June 2016