Bear of the Day: MarineMax (HZO)

The market gave a little bit back from all-time highs Monday. It could tempt a lot of investors to blindly buy the dip. You’ve got to be extra careful during times like this. You want to try to avoid stocks that are all hype and no earnings. One way to uncover these potential pitfalls is by leaning on the Zacks Rank. Stocks in the good graces of our Zacks Rank have the strongest earnings trends. The opposite is true for stocks that are Zacks Rank #5 (Strong Sell) stocks.

One such stock investors may want to be cautious with is today’s Bear of the Day, MarineMax (HZO). The pandemic boat-buying frenzy has sailed far over the horizon, leaving MarineMax stuck in the doldrums. With the Fed keeping interest rates high for so long, financing a half-million-dollar yacht feels more like a punishment than a pleasure, and inflation is squeezing wallets tighter than a life jacket two sizes too small. That’s shown up in the numbers from earnings misses to sluggish sales and, worst of all, analysts bailing out on their estimates.

MarineMax, Inc. Price and Consensus

MarineMax, Inc. price-consensus-chart | MarineMax, Inc. Quote

Analyst projections keep drifting lower, giving HZO a Zacks Rank #5 (Strong Sell). Our current year Zacks Consensus Estimate is off from $2.00 to only 74 cents over the course of the last 90 days. The story is similar with next year’s numbers. Our Zacks Consensus Estimate is off from $2.67 to $2.05.

Management has tried to patch the hull by adding marinas and service revenue, but the core retail engine is sputtering. Inventory is piling up, discounts are cutting into margins, and the Street isn’t exactly throwing out life preservers. When consumers are downgrading from champagne to seltzer, the yacht market is the first thing to hit the rocks. Until earnings estimates start floating back up, MarineMax looks more like dead weight than a vessel worth boarding. In other words, don’t buy the yacht when you can barely afford the dinghy.

MarineMax is in the Retail – Miscellaneous industry which ranks in the Top 14% of our Zacks Industry Rank. There are other names within that industry which are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) stocks Build-A-Bear (BBW) and SharkNinja (SN).


 

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Build-A-Bear Workshop, Inc. (BBW): Free Stock Analysis Report
 
SharkNinja, Inc. (SN): Free Stock Analysis Report
 
MarineMax, Inc. (HZO): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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