Marine Products: Cheap, Resilient Cash Flows During Industry Turbulence (Rating Upgrade)

Caffital Research
1.62K Followers
(10min)

Summary

  • MPX's revenue declines in Q4 and Q1 have been deeper than previously anticipated as industry challenges persist.
  • Excess dealership inventories and weak consumer confidence continue to ravage demand, but an eventual industry recovery should happen with interest rates playing a key role.
  • Despite the challenges, MPX has maintained high margins and has a strong balance sheet leaving potential for M&A or excess capital distribution.
  • The valuation now represents an attractive opportunity.

Lake and mountains

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Marine Products (NYSE:MPX), the fiberglass powerboat manufacturer selling under brands such as Chaparral, Robalo, and SSX, has faced significant financial turbulence in the two quarters reported after my previous article on the stock.

In the

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1.62K Followers
I am an avid investor with a major focus on small cap companies with experience in investing in US, Canadian, and European markets. My investment philosophy to generating great returns on the stock market revolves around identifying mispriced securities by understanding the drivers behind a company's financials, and ultimately, most often revealed by a DCF model valuation. This methodology doesn't limit an investor into rigid traditional value, dividend, or growth investing, but rather accounts for all of a stock's prospects to determine the risk-to-reward.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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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