Here's Why You Should Buy Malibu Boats (MBUU) Stock Now

Shares of Malibu Boats, Inc. (NASDAQ:MBUU) have skyrocketed nearly 100% in the last year, widely outperforming its industry's decline of 0.9%.

We are optimistic about this Zacks Rank #1 (Strong Buy) company’s prospects and believe that the time is right for you to add the stock to portfolio as it is poised to carry the momentum ahead.

Earnings & Revenue Growth: Malibu Boats makes for a great pick in terms of Growth investment. Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects (and stock price gains) ahead for the company in question.

While Malibu Boats has put up a historical (last 5 years) earnings per share(EPS) growth rate of 31.2%, thoroughly crushing the industry average of 15.3%, investors should really focus on projected growth. Over the next three to five years, the company is looking to grow its EPS at a rate of 15% compared with the industry average of just 12.7%.

Propelling the earnings forward is the company’s solid revenue growth story. Its last five years revenue growth was 14.1%, while industry average was 6.5%. Moreover, the projected sales growth for the current year is a whopping 58.4%, while the broader industry’s estimated growth is 6.9%.

These figures substantiate the company’s Growth Score of A on our style score system that helps us to identify potential outperformers.

Valuation Looks Rational: Malibu Boats also has a Value Score of A. This score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.

The company is currently trading at a trailing 12-months P/E multiple of 17.75 while the industry’s average stands at 22.41. Also, it is trading at a PEG – ratio of the P/E to the expected future earnings growth rate – of 1x, much lower than the industry average of 1.39x.

These ratios deem Malibu Boats undervalued in comparison with its industry peers, and indicate a good time to buy.

Earnings Surprise History & Estimate Revisions: Malibu Boats has an impressive earnings surprise history. The company has outpaced/met the Zacks Consensus Estimate in each of the six trailing quarters, with a positive average earnings surprise of 7.83% in the last four quarters.

Furthermore, upward estimate revisions reflect optimism in the stock’s prospects. The Zacks Consensus Estimate for Malibu Boats’ current-quarter earnings has moved up 5.3%, reflecting two upward revisions versus none downward, over the last 30 days. Also, current-year’s earnings estimates have inched up 0.7%, on the back of eight two positive revisions versus none in the opposite direction.

Favorable ROE: Malibu Boats’ trailing 12-month return on equity (ROE) supports its growth potential. The company’s ROE of 98.6% compares widely favorably with the industry’s average ROE of 18.8%, reflecting that it is more efficient in using shareholders’ funds.

Other Stocks to Consider

Some other top-ranked stocks in the industry include Camping World Holdings, Inc. (NYSE:CWH) , Town Sports International Holdings, Inc. (NASDAQ:CLUB) and ILG Inc. (NASDAQ:ILG) . All of these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, Camping World, Town Sports and ILG have surpassed estimates in each of the trailing four quarters, recording an average positive surprise of 43.47%, 52.48% and 24.4%, respectively.

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