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BRP Inc - Stock Quote DOO

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Morningstar's BRP Inc Stock Analysis

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Narrow-Moat BRP Continues to Build on Strengths in Updated 2025 Plan; Shares Attractive

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We don't plan any material change to our CAD 122/$97 per share fair value estimate for narrow-moat BRP after incorporating updates from its investor day. While an updated fiscal 2025 plan was offered, calling for more than CAD 12 billion in sales and EPS of CAD 13.50-CAD 14.50, this wasn't far from our existing fiscal 2025 projections, which included sales of above CAD 11 billion and EPS of CAD 13.67. For reference, the prior 2025 plan (issued in 2019) sought CAD 9.5 billion in sales and EPS of CAD 7.50 (which the firm handily surpassed in 2021, at CAD 9.92 in adjusted EPS). The majority of the outlook's upside stems from the Can-Am brand, which is set to capture more than CAD 7 billion in sales in fiscal 2025, CAD 2 billion higher than earlier forecasts. While an incremental CAD 100 million in cost savings is now set to be achieved (on top of the CAD 300 million set forward in 2019), we don't expect to raise our long-term EBITDA margin outlook much higher than the 16% we already model (a touch lower than the 17% the firm is targeting), as we expect sales programs could become more competitive across the peer set, constraining profit gains.

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BRP Inc's Company Profile

Business Description

BRP designs, develops, manufactures, distributes, and markets snowmobiles, all-terrain vehicles, and personal watercraft under the Ski-Doo, Sea-Doo, Can-Am, and Lynx brand names. It also builds engines under the Rotax brand (after discontinuing the Evinrude outboard engine business in 2020) and offers clothing, parts, and accessories that cater to its core consumers. In 2018, BRP created a marine group, acquiring boat manufacturers Alumacraft, Triton (which makes Manitou pontoon boats), and Telwater (in Australia). At the end of fiscal 2022, the company marketed its products through a network of more than 2,800 independent dealers and 170 distributors in about 120 countries.

726 Saint-Joseph Street
Valcourt, QC, J0E 2L0, Canada
T +1 450 532-6154
Sector Consumer Cyclical
Industry Recreational Vehicles
Most Recent Earnings Apr 30, 2022
Fiscal Year End Jan 31, 2023
Stock Type
Employees 20,000