Why Shares of Brunswick Corporation Plunged 16% Today

People aren't buying boats or fitness equipment at the rate Brunswick hoped, and that's pushing shares lower.

Travis Hoium
Travis Hoium
Oct 26, 2017 at 2:53PM
Industrials

What happened 

Shares of marine and fitness company Brunswick Corporation (NYSE:BC) dropped as much as 16.4% in trading Thursday after the company released third-quarter earnings that fell short of expectations. At 2:20 p.m. EDT, shares were still down 13.6% on the day. 

So what

Net sales were up 4.4% to $1.14 billion and net income fell 7% to $79.0 million, or $0.88 per share. On an adjusted basis, earnings were $0.91 per share. Analysts were expecting revenue of $1.17 billion and earnings of $1.00 per share, which was well above what was actually reported. 

Yacht on open water sailing into the sunset.

Image source: Getty Images.

What may be more consequential long-term is that management expects full-year earnings of $3.85 to $3.87 per share, well below the $4.04 in earnings expected by Wall Street. 

Now what

According to management, Brunswick is facing headwinds in both marine and fitness segments because of weak retail demand. Outboard motor sales patched over some of the weakness, but it doesn't look like the near future will see much in the way of growth or margin expansion. Shares aren't terribly expensive at 13 times the top of the earnings outlook, but with the headwinds management expected, I don't think this is a buying opportunity today.