About MarineMax
Have any of you ever heard of the song “Sailing” by Christopher Cross?
It is what we imagine avid boaters and sailors enjoy cruising to while out on the open waters.
At least, it is what we would listen to if one day we ended up being customers of MarineMax, one of the more prominent firms that focuses its efforts on selling boats.
Headquartered in where else but Clearwater, Florida, MarineMax has a rather extensive catalog of not only a variety of boats, but also, reserved for the big bosses, yachts.
Now, contrary to what one might initially think, a yacht, according to the displayed inventory on MarineMax’s yacht selling platform, doesn’t have to be the approximate size of a cruiseliner.
In fact, the company has yachts of all shapes and sizes with different capabilities and uses, many of which aren’t even all that expensive, at least given the initial price points we guessed prior to doing some research on the company.
At the end of the day, this company runs a fairly simple business model in that it focuses the majority of its efforts on selling boats and yachts.
Now onto some more pressing matters, whether or not the boat and yacht markets are respectively recession proof would frankly be news to us, as we are admittedly not experts on these markets, at least as much as we are as it relates to, say, the car market.
Maybe they are similar and maybe they aren’t.
However, we do figure that it is primarily the case that luxury expenses among the wealthy are fairly inelastic in that those who are wealthy can continue, largely irrespective of the state of the economy, purchasing and tending to (financially, we mean) their luxury toys, with boats and yachts obviously falling into that category.
This would bode well for a company such as MarineMax.
However, let’s step away from making assumptions and take a glimpse into this company’s core financials and other related ratios and metrics so as to garner a more informed opinion of whether or not this company’s stock (NYSE: HZO) is worth considering an investment in for now and for later.
MarineMax’s stock financials
With a current share price of $33.47, a market capitalization of $731.49 million, a price-to-earnings (P/E) ratio of 4.64 and no annually dished out dividend offered to its shareholder base at the moment, shares in MarineMax (NYSE: HZO) appear to be potentially discounted according to its low, single-digit price-to-earnings ratio, which is hardly ever a bad thing, as it indicates that one could potentially pick up shares in this company’s stock for a steal relative to what they are actually, intrinsically worth.
As it relates to the company’s balance sheet and its overall structure and health, MarineMax’s executives are in charge of approximately $1.3 billion in terms of total assets as well as $570 million in terms of total liabilities, which is a great balance sheet breakdown, from our perspective, especially when considering that MarineMax has had to consistently sell through much of its inventory to keep its total liabilities low and it has seemingly done just that.
Speaking of sales, according to the company’s associated income statement, MarineMax’s total annual revenues since 2018 have steadily grown on a year-over-year (YOY) basis, starting out at nearly $1.2 billion in 2018, almost $1.3 billion the following year, just north of $1.5 billion in 2020, rising to its last reported figures (displayed on TD Ameritrade’s platform) of just over $2 billion (2021) and $2.3 billion (2022).
This confirms that our initial thoughts regarding boats and yachts being viewed as price inelastic by many (especially to its core consumer, the wealthy) were apparently accurate, clearly not letting the overall state of the economy dictate their purchasing habits in this space.
Additionally, it can be assumed that this company opted to up some of its prices due to prevailing supply chain and COVID-19-related challenges facing the industry and the world as a whole.
In terms of the company’s cash flow statement, positive net income has been the absolute norm for this company since 2018, as it has also risen substantially between 2018 and its latest reported figure in 2022, starting at $39.3 million (2018) and finding itself all the way up at just under $198 million in 2022, which is also incredible considering the economic headwinds plaguing other companies and entire industries during that five year time period.
MarineMax’s stock fundamentals
Moving onto some matters relating to the company’s profitability, specifically its trailing twelve month (TTM) net profit margin and how it shakes out in comparison to the industry’s average, MarineMax is quite aligned with that of the competition (on average), as it is listed on TD Ameritrade’s platform as 6.88% to the industry’s listed average of 8.08%.
Although MarineMax’s is slightly lower than the industry’s average, this is likely due to the fact that this company has so much more inventory compared to the competition and thus has perhaps temporarily lowered its margins, especially in recent months and years to continue unloading inventory into the hands of its customers, again, bruising its margins in the process.
Nevertheless, we don’t view this discrepancy to be a huge thorn in our side given the other information we have gathered.
With relation to the company’s TTM returns on assets and investment(s), MarineMax’s both trail the industry’s average by modest amounts, which also doesn’t concern us gravely since this company probably has significantly more operations across the United States than its competitors, which usually means it can naturally take a little more time to attain returns on the numerous assets and investments it is establishing today in order to generate a better tomorrow, financially.
As long as there is some improvement over time, we have no qualms with MarineMax in this respect given its scale and national presence.
Should you buy MarineMax stock?
It has largely been smooth sailing so far.
Please excuse us and our bad jokes.
With a balance sheet that is in mint condition, a quite favorably positioned price-to-earnings ratio (and thus valuation), steadily growing total annual revenues in the midst of economic uncertainty and turmoil, a competitive TTM net profit margin and strong cash flows, there sure isn’t a whole lot to dislike about this company and how it handles its business and really, the industry in which it operates in to begin with.
Putting all of this together, we think it makes the most sense at this juncture to give MarineMax’s stock a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.