Like a little speedboat darting around the slow-moving tankers, Motley Fool Hidden Gems recommendation Marine Products (AMEX:MPX) continues to grow and thrive without the oversight or "help" of Wall Street analysts. While the conference call for this manufacturer of pleasure boats lasted all of 10 minutes and featured exactly one analyst, Marine Products impresses the people who count -- its shareholders -- as shares have more than doubled over the past year.
The fourth quarter looks like it was another good one for Marine Products. Sales climbed more than 33% as increases in volume (20.6%) and price (9.8%) were both significant. (Sales of parts and accessories made up the rest of the growth.) It's important to note that sales of the higher-margin Robalo line continue to grow at a rate faster than the rest of the business is seeing.
Margins were a bit weak for the quarter as higher material costs, production adjustments, and the absence of prior-year expense adjustments took gross margins down almost 3% from the previous quarter. While the company was able to recoup some of the difference on the selling, general, and administrative expenses line, operating margin for the quarter was down 1.5% from last year to 12.9%.
Even with this "disappointment," Marine Products still boasts an operating margin more than 50% better than rival boat-maker Brunswick (NYSE:BC) and is growing at a faster clip.
Better still, free cash flow and its cousin, owner earnings, are growing strongly. FCF came in at almost $26 million for the year, vs. $14.1 million last year, and owner earnings were $23 million, vs. $17 million. Putting some of that cash to work, management also announced a 50% hike in the company's dividend.
Valuation may have caught up to these shares, given a trailing price-to-earnings ratio of 34 and an enterprise value-to-FCF number of 28, but this is still a compelling story. Return on equity exceeds 30%, and return on assets exceeds 24%. The company is growing at a 30%-plus clip, and it hasn't even scratched the surface of possible overseas sales. Good growth doesn't often sell cheap, so Fools should take a look at these shares and see whether they're something that would float their boats.
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Fool contributor Stephen Simpson has no ownership interest in any stocks mentioned.
