Summer Sale
50% off Premium Yearly
Opinions John Kim
BRP INC.DOO.TOCOMMENTMar 21, 2016
John KimStock price when the opinion was issued
As of Jun 12, 2026. Market Open.
You might be interested:
;fill-opacity:1;'/%3e%3cpath%20d='M31%2018.6001V30H8V18.6001L14.1334%2022.4334L19.4999%2014L24.8669%2022.4334L31%2018.6001Z'%20fill='%23EE5432'%20style='fill:%23EE5432;fill:color(display-p3%200.9340%200.3310%200.1956);fill-opacity:1;'/%3e%3c/svg%3e){kind=small}
Premium content
Premium contentThe Quebec based manufacturer of outdoor recreation vehicles is a TOP PICK. We like how cash reserves are growing as the company aggressively buys back shares and reduces debt. It trades at 26x earnings and supports a 31% ROE. We recommend setting a stop-loss at $67, looking to achieve $93 -- upside potential of 20%. Yield 0.8%
(Analysts’ price target is $93.25)Premium contentOur PAST TOP PICK with DOO has triggered its stop at $80. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 9%, when combined with our previous recommendations.
DOO reported EPS of 61c, beating estimates of 44c but declining from prior quarterly levels of $3.21. Revenue came in at $1.84B missing estimates of $1.89B and declining 34% year-over-year. Lower revenues were attributed to lower volume across most product lines as it continued to reduce its network inventory levels. Operating margins also dropped 470 basis points as a result of the lower volumes. DOO also cut its FY2025 guidace significantly. Revenue of C$7.8B-C$8B is expected from C$8.6B-C$8.9B, and normalized EPS of C$2.75-C$3.25 is expected from C$6.00-C$7.00. The results were of course not good and highlight the softening industry demand and transitional period the company is entering, as described in our recent report.
Unlock Premium - Try 5i Free
It is picking up market share in recreational products. It is cheap at 8X operating cash flow. The consumer may be slowing down
John ZechnerPremium content
Premium contentWith cash reserves growing, debt declining and shares being bought back, we select DOO as a TOP PICK. Seasonal sales in both water and power sports will begin to ramp up. It trades 8x earnings and supports a strong ROE. Its modest dividend is backed by a payout ratio under 10% of cash flow. We recommend setting a stop-loss at $67, looking to achieve $102 — upside potential of 22%. Yield 0.8%
(Analysts’ price target is $102.22)Trades at 8x PE vs. peers at 12x. They mostly beat their last quarter, generate free cash, take more market share and enjoy robust demand for snowmobiles. A caveat is that in a downturn, discretionary costs like this will be cut.
(Analysts’ price target is $138.93)John ZechnerIt held up well during the downturn and is therefore resilient. It has rallied and maintained at these higher levels. The consumer goods sector and leisure products are doing well.
David Burrows3-5 year hold? An innovative company that captivates its customers. On a 12-month trailing basis is earning 2x what its normalized earnings power is. They sell jet skis and other expensive toys that people bought during the pandemic, and you won't need to replace those anytime soon. It was a 6-bagger during Covid, but has since come off 28%. This will likely grind lower lower before it resumes its uptrend. Still not cheap and expectations are still too high. If you hold this for 3-5 years it's probably okay, but not for him.
Just reported really good numbers. The problem has been much more on the snowmobiles and the lack of snow. The outlook on their water sports side seems to be pretty good. They say they are getting traction and taking market share on their ATVs, and he thinks this is the big engine. Their main competitor, Polaris (PII-N), has had their valuations come down remarkably over the past year, which has weighed on this stock as well. If you have a view that the US consumer is going to continue spending in the US and Canada for recreational products, then it probably makes sense for you to hold onto this. His view is that the consumer is getting close to being tapped out.