With Earnings on the Horizon, Will Brunswick Stock Sink or Swim?

The company is slated to release earnings before the open on Thursday, April 28

Apr 12, 2022 at 10:10 AM

Brunswick Corporation (NYSE:BC) is getting ready to release its first-quarter results before the open on Thursday, April 28. During its last quarterly report, BC reported earnings of $1.44 per share, and this time around Wall Street analysts anticipate that the the marine retail company’s EPS (earnings per share) will come in at a drastically increased $2.32. The stock tends to do well after earnings reports, logging positive returns after five of its last eight, and averaging a 2.6% next-day swing, regardless of direction.

Today, the stock is up 2.6% at $76.54 as it attempts to distance itself from its April 6 annual low of $72.71. The equity is still a ways away from its May 10 record peak of $117.62, and will have to square up with all short- and long-term trendlines if it wants to work off its 25% year-over-year deficit.

bc apr 12

Analysts remain optimistic. All nine in coverage consider it a "buy" or better. Plus, the 12-month consensus price target of $116.75 is a 51.5% premium to current levels.

Options traders have taken a more bearish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BC sports a 10-day put/call volume ratio of 4.24, which sits higher than 81% of readings from the past year. In other words, long puts have rarely been more popular during this time period.

The marine retail stock provides an intriguing option for investors at its current valuation. Brunswick stock trades at forward price-earnings ratio of 10.24 and a price-sales ratio of 1.00. BC also offers a dividend yield of 1.93% with a forward dividend of $1.46. Additionally, Brunswick is expected to see 10.7% earnings growth and 8.6% revenue growth next year, making Brunswick stock an attractive play over the next two years from a value perspective.

Brunswick stock, however, has shaky fundamentals and could be a risky investment in the long run. That is largely due to BC's weak balance sheet, which currently holds $355 million in cash and $1.92 billion in total debt. Still, Brunswick stock presents high reward potential as a relatively short-term investment.

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