On Friday, Stifel adjusted its financial outlook for Brunswick Corp (NYSE:BC), decreasing the price target to $95 from the prior $97, while still endorsing the stock with a Buy rating. The revision comes as the analyst anticipates a continued year-over-year decline in the company's second-quarter earnings, though at a moderating pace compared to the first quarter.
Brunswick is expected to report adjusted earnings per share (EPS) of $1.93, down 18% from $2.35 in the same quarter of the previous year. This forecast is slightly below the consensus of $1.91 and at the lower end of the company's own guidance range of $1.85 to $2.05. Revenue projections have been set at $1.540 billion, representing a 10% year-over-year decrease and also below the consensus estimate of $1.556 billion.
The detailed analysis by segment shows expected declines in Propulsion revenue to $632 million and Navico sales to $211 million. However, Engine P&A is projected to achieve modest growth with a top line at $335 million. The Boat segment is anticipated to face a steeper revenue drop of 19% to $457 million, along with margin contraction.
Retail unit sales data for April and May 2024 indicated a 5% industry-wide decline, with Brunswick's sales falling 13% year-over-year, particularly in pontoons and fiberglass boats. Despite this, the company's year-end inventory and financial metrics are projected to remain consistent with the previous year.
In light of these factors, Stifel has made slight adjustments to its second-quarter and second-half forecasts for 2024, now predicting an adjusted EPS of $7.25, down from the previous estimate of $7.54. Brunswick is scheduled to release its second-quarter financial report on July 25, before the market opens.
In other recent news, Brunswick Corp has been the subject of several important developments. B.Riley, an analyst firm, lowered the price target for Brunswick's shares from $108 to $97, while maintaining a Buy rating, suggesting confidence in the company's long-term prospects.
This change reflects the firm's recalibration of expectations amidst market conditions. Additionally, B.Riley highlighted Brunswick's likely strategy to increase share buybacks in response to ongoing share price dislocation.
In the financial arena, Brunswick Corp announced a quarterly dividend of $0.42 per share, a move that underlines its commitment to shareholder value.
The company also reported first-quarter net sales of $1.4 billion and adjusted earnings per share of $1.35, showing a steady start to the year. These results were boosted by market share gains in its Mercury Marine division and the successful launch of 25 new products.
Despite challenging economic conditions, Brunswick maintains its guidance for the main selling season and has executed strategic financial initiatives, including a $400 million debt issuance and plans for $250 million in share repurchases.
InvestingPro Insights
As Brunswick Corp (NYSE:BC) navigates through its fiscal challenges, investors may find value in the company's consistent shareholder returns and stock performance. According to InvestingPro Tips, Brunswick has not only raised its dividend for 11 consecutive years, but it also boasts a remarkable 54-year streak of maintained dividend payments. This commitment to shareholders is further underpinned by a significant return over the last week, with a 9.53% price total return, showcasing a potential rebound in investor confidence.
From a financial perspective, InvestingPro Data highlights a P/E ratio of 4.62, suggesting that the stock may be undervalued relative to earnings. Furthermore, the company's liquid assets exceed short-term obligations, indicating a strong liquidity position that could reassure investors of Brunswick's ability to meet its immediate financial commitments. Additionally, analysts predict the company will be profitable this year, with a profitable track record over the last twelve months, which aligns with the positive outlook on its ability to sustain dividends and potentially continue its share buyback strategy.
For those looking to delve deeper into Brunswick's financials and strategic positioning, InvestingPro offers additional insights and metrics. By using the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a comprehensive suite of tools and analytics to inform their investment decisions. There are currently 7 additional InvestingPro Tips available for Brunswick, which can provide further clarity on the company's performance and prospects.
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