Shares of recreational boat and yacht retailer OneWater Marine (ONEW +14.48%) fell 14.1% through 12:30 p.m. ET Tuesday after badly underperforming analyst forecasts for the company's fiscal Q3 2024.
Heading into the quarter, Wall Street had OneWater Marine pegged for a $2.12-per-share "adjusted" profit on $608 million in sales. But OneWater earned just half what it was supposed to -- $1.05 per share -- as sales fell deeply short at just $542.4 million.
NASDAQ: ONEW
Key Data Points
OneWater Marine Q3 earnings
The news was actually even worse than that, though. OneWater's "$1.05" was a non-GAAP number. When calculated according to generally accepted accounting principles (GAAP), OneWater's profit was only $0.99 per share.
Management put the best spin it could on the results. While sales declined 9% year over year, for example, CEO Austin Singleton pointed out that OneWater suffered "severe weather impact in Texas" and still "significantly" outperformed the rest of the recreational boating industry.
Still, new-boat sales fell 10% and used-boat sales were down 4%, and overall same-store sales declined only 8% -- so adding new locations actually hurt results rather than helping them in the quarter. That said, most of the damage was felt in Texas (site of the "severe weather"). Ex-Texas, Singleton pointed out that same-store sales declined less than 2%.
Is OneWater Marine stock a sell?
Perhaps this is one reason Singleton remains "cautiously optimistic" about the rest of this year. Shifting to guidance, OneWater says overall same-store sales will be down by only midsingle digits -- a slight improvement over Q3. And earnings (that is, adjusted earnings) should still range from $1.50 to $2 per share this year.
Viewed optimistically, and assuming OneWater hits the top of its guidance range, this forecast implies the stock could be trading as cheaply as 13 times earnings right now. For a company that -- despite all its troubles -- has averaged better than 15% operating profit growth over the last five years, that's probably not a bad price. I wouldn't necessarily sell OneWater today -- especially not right after its sell-off.
