Stock of the Week: BRP

Want a Sea-Doo? Get in line

Andrew Willis 31 May, 2021 | 4:28AM
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Andrew Willis: As Sea-Doo season is about to kick-off and the backlog of orders for the recreational vehicles grows larger, how’s BRP doing? Is it benefitting from our desire to make this summer much better than last year?

We think fiscal 2022 should be another banner year for the company as we get back outside, and demand for ATVs and personal watercraft picks up. Dealer inventory can’t keep up right now. But investors should be most excited about long-term developments.

Senior Equity Analyst Jaime Katz says BRP’s strategic priorities should improve the firm’s competitive positioning to help sustain its sales success. BRP is set apart thanks to its focus on lean operations, the cultivation of an engaged workforce, and manufacturing processes that allow it to respond quickly to changing consumer tastes.

Right now, the stock is overvalued, but we don’t see the market as far off from what it’s worth. Our base case sees the company’s strategies, exemplary capital allocation, strong brand and leading market share resulting in competitive returns.

And then there’s product innovation, where we see new differentiated offerings in the marine segment, and electric vehicle offerings in all segments by 2026. With a narrow moat and industry-leading market share, we see BRP benefitting from the end of lockdowns for years to come.

For Morningstar, I’m Andrew Willis

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BRP Inc94.57 CAD-0.97Rating

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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