Following the surge in boat sales brought on by the pandemic, 100 million Americans now hit the water by boat each year. Between 2019 and 2020, new boat sales enjoyed a 40% jump, and first-time boat owners increased by an astounding 35%.
Despite a return to more seasonal boat sales and more cautious consumers, Grand View Research estimates the global leisure boat market will grow by more than 5% per year through 2030.
With that in mind, let's examine two recreational boating stocks to determine which makes a better buy in today's market.
The case for MarineMax
The self-described "world's largest lifestyle retailer of recreational boats and yachts, as well as yacht concierge and superyacht services," MarineMax(NYSE: HZO) operates within multiple segments of the boating industry. Whether they're buying a boat, chartering a yacht, or docking at a marina for maintenance, MarineMax serves the needs of recreational boaters everywhere.
The recently acquired IGY Marinas proved to be a fiscal second-quarter earnings highlight for MarineMax. Purchased in October of last year, IGY owns and operates 23 luxury marinas in sumptuous yachting hot spots all over the world. Since its addition, the company has been "exceeding expectations," according to MarineMax CFO Michael McLamb.
Thanks to IGY Marinas, MarineMax achieved a new second-quarter gross margin record of 35.2%. Additionally, MarineMax's remaining higher-margin revenue streams performed solidly last quarter, including its superyacht brokerage, charter, and concierge services.
Despite a strong showing among its high-end businesses, MarineMax's second-quarter revenue of $570 million marked a 7% plunge year over year. A same-store sales drop of 13% was primarily to blame, fueled by what CEO Brett McGill called "the boating industry's return to seasonality amid growing macroeconomic uncertainty."
But considering 2022 was a stellar year for MarineMax, the second quarter's year-over-year performance isn't all that discouraging. Last quarter's revenue total was the company's second-best in its second-quarter history -- not to mention an 88% increase over 2019's $304 million during the same period.
The case for Marine Products
Marine Products(NYSE: MPX) designs, manufactures, and sells recreational sport fishing, wakesurfing, and waterskiing boats for fun times afloat. After driving record sales of $119 million last quarter, the Atlanta-based company has replenished its dealer inventories in preparation for peak retail selling season.
The company reeled in record first-quarter sales thanks to an improved supply chain, which included the Marine Products' internal transportation capabilities. First-quarter revenue of $119 million marked a 55% year-over-year increase. More impressively, net income ended at $11.6 million for a 64% gain over first-quarter 2022.
Operational expenses also rose last quarter, including a 57% jump in selling, general, and administrative costs. Despite these added costs, Marine Products also saw a slight gain in gross margin as a percentage of net sales, finishing at 24.4%. Price increases and internal manufacturing efficiencies helped offset inflation and supply chain-related costs.
Although improving, supply chain issues persist for Marine Products Corporation. CEO Ben Palmer noted in the company's first-quarter earnings release, "Our logistical issues and availability of materials and components continue to improve although we are still experiencing sporadic shortages of certain manufactured components."
Another noteworthy statistic from Marine Products' first-quarter performance was its international sales growth. Year over year, international sales saw an 89% boost. Although only 7% of Marine Products' current sales are international, watch for continued market share gains in this segment.
Which stock is a better buy right now?
To get a better idea of which marine stock presents a better long-term investment, I've compared their price-to-earnings (P/E), price-to-sales (P/S), and price-to-book (P/B) ratios.
| Metric | MarineMax | Marine Products |
|---|---|---|
| Market capitalization | $752 million | $563 million |
| Price-to-earnings ratio | 4.8 | 12.4 |
| Price-to-sales ratio | 0.3 | 1.3 |
| Price-to-book ratio | 0.9 | 4.3 |
Data Source: Ycharts.
With dramatically lower P/E, P/S, and P/B ratios, MarineMax is today's clear winner. It also has a more diversified business, potentially providing greater stability. But as long as the recreational boating industry continues to prosper, both of these stocks stand to rise with the tide.
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Micah Angel has positions in MarineMax. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
