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Brunswick Corporation: One Of The Biggest Bargains In The Market

Oct. 05, 2022 9:50 AM ETBrunswick Corporation (BC)2 Comments
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  • Brunswick Corporation is trading at an extremely attractive valuation.
  • Recent financial results were quite strong, with all business segments firing on all cylinders.
  • The company is growing and gaining market share, especially internationally.

Catamaran motor yacht on the ocean

NiseriN/iStock via Getty Images

We are surprised to continue seeing Brunswick Corporation (NYSE:BC) trading at an extremely low valuation, even after the company delivered the best quarter in its history in Q2 2022. The company is seeing limited signs of fuel

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Fin-tech startup leveraging machine learning technology to discover investing opportunities and to generate growth-optimal portfolios. Publisher of the WideAlpha AI-Selected Index, which has markedly outperformed its benchmark.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

zito profile picture
I like the stock level, and expect they will recover once the interest rate/recession conversation is resolved. I would also note that they have funded the growth of A/rec and inventory by $600M over the last year. In the past we worried about too much debt, but now low priced debt is an asset. Looking to get long before the election.
There are multiple issues though that we’re dealing with.

1. The engine business is losing share to increasing numbers of electric options. That appears to be accelerating in more modes of the business although the high end will be safe for the next couple of years. But that won’t last forever.

2. Customers are less than thrilled with the P&A strategy that David Foulkes described in an IBI interview as Brunswick getting their “tentacles” into other brands of boat builders. That interview has already had and will have huge ramifications for the P&A business as no customer wants to have Brunswick get their “tentacles” into its boats and customers. This completely changed how customers view Navico and the related brands and will be a huge problem to deal with.

3. Garmin is already taking huge share from Navico and this trend will accelerate. Plus, the other areas of the legacy P&A are being increasingly neglected putting those businesses at risk and decline. Check out the organic growth of the core P&A business from the last report and the next one. Not healthy despite the temporary optics of acquisition comps. That runway is running out. The expectation is already for no bonus in this segment due to deteriorating fundamentals.

4. We can talk about pipelines all we want but the next downturn is coming and it’s going to be painful as the fixed cost structure is being established as if the trees are going to grow to the sky. They are not. When the tide goes out it is going to get ugly fast.

These are just a few of the issues that cause our multiple to be depressed. All of the focus is at the high end of the market but we are leaving the average boater behind and the competition is picking it up in the boat business and P&A. As always Mr. Market is most wise.
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