Brunswick Corp - Momentum

Brunswick Corp (BC) has been hot for the last months, jumping from $16 in early December to a recent multi-year high above $26. With four consecutive earnings surprises and a bullish growth projection, this Zacks #1 rank stock throws a recreational twist into the momentum faction.

Company Description

Brunswick Corp operates as a diversified recreation products company, specializing in products like boats, boat engines, billiards and fitness programs worldwide. The company was founded in 1844 and has a market cap $2.29 billion.

With the domestic and global economies showing more signs of stability over the last six months, consumers have become more comfortable spending on highly discretionary items like boats and billiards. That trend lifted Brunswick to strong Q4 results in late January that came in ahead of expectations.

Fourth-Quarter Results

Revenue for the period was up 11% from last year to $729 million. Earnings also came in ahead of expectations at a loss of 94 cents, outpacing the Zacks Consensus Estimate by 10%.

The quarter was led by Brusnwick’s largest segment, Marine Engines, where sales were up 17% from last year to $302 million. Sales in its boat segment were also on the upswing, increasing 7% from last year to $153 million.

Financial Profile

But in spite of the turbulent economy of the last few years, Brunswick still has a very solid balance sheet, with cash and equivalents of $551 million and total debt of $831 million.

Estimates

We saw some movement in estimates on the good quarter, with the current-year estimate up one cent to 27 cents while the next-year estimate added 2 cents to $1.11, a very bullish 319% growth projection.

Valuation

Based upon the bullish 2012 earnings projection, BC trades with a forward P/E of 23X, a premium to its peers and the S&P 500.

6-Month Chart

On the chart, BC has been strong for the last 4 months, recently hitting a new multi-year high at $26.52. Look for support from the trend line on any weakness, take a look below.