Boat maker Marine Products (NYSE:MPX) broke a string of two earnings misses when it reported in-line profits last quarter. But the subsequent conference call gave little reason to hope for outsized improvements in the near term. Will Wednesday morning's news for the first quarter of 2007 sound any better?

What analysts say:

  • Buy, sell, or waffle? Only three analysts still follow Marine Products, each with a hold rating.
  • Revenues. On average, they're looking for a 4% slide in sales to $66.9 million.
  • Earnings. And they predict flat profits of $0.15 per share.

What management says:
Marine Products' only significant 8-K filing with the SEC since reporting its Q4 numbers was an announcement that the company had bought back 185,400 shares in Q1. Based on the shares' average price over the past 50 days, I'd posit that means that Marine Products spent about $1.8 million -- or just 3% of its cash on hand -- and reduced its share count by less than half a percent. Hardly a ringing endorsement.

What management does:
If you've been following Marine Products for any length of time, you know the story by now. Gross, operating, and net margins are all headed down, downer, and downest. But for optimists, there's still some good news -- big boats, which are more profitable to make, continue selling, and for all of its troubles, the company remains solidly profitable, with margins still in the upper single digits.





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Since the only real recent news we've had to work with regards share purchases, let's take a look at ... share purchases. Specifically, should you make some?

From a straight "is the P/E less than the growth rate?" perspective, that answer would be "no." With those shrinking margins, a trailing P/E of 17.8, and growth projected at just 7.5% going forward, the company's shares look overpriced -- and that might explain why management's buybacks have been so tepid.

That said, I see two points in favor of the shares that make a case for buying more aggressively -- and that applies to you and management alike. For one thing, free cash flow at Marine Products is about 10% greater than what the firm reports as GAAP net profits. For another, analysts' growth projections may turn out to be conservative. Analysts, after all, expect archrival Brunswick (NYSE:BC) to grow at 10%. Moreover, in the five years before the current doldrums set in, Marine Products grew its profits at a compounded annual rate of 19%. If the firm can achieve that feat again, its shares will look deeply undervalued at today's price.

How much, then, is a fair price to pay for the shares? Fool co-founder Tom Gardner, who recommended the stock to Motley Fool Hidden Gems members back in October 2004, has a price in mind. To learn what he'd pay for the shares, claim your free 30-day trial to the service, and click on over to his semiannual review of past recommendations.

What did we expect out of Marine Products last quarter, and what did it produce? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.