Brunswick (BC)

Boat and marine manufacturer Brunswick (NYSE:BC) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.8% year on year to $1.36 billion. The company’s full-year revenue guidance of $5.2 billion at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP profit of $0.97 per share was 13.3% above analysts’ consensus estimates.

Company Overview

Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.

Leisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.

Competitors in the recreational marine industry include Malibu Boats (NASDAQ:MBUU), Marine Products (NYSE:MPX), and MasterCraft Boat (NASDAQ:MCFT).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Brunswick’s sales grew at a sluggish 4.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Brunswick’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 11.5% annually.

This quarter, Brunswick reported year-on-year revenue growth of 6.8%, and its $1.36 billion of revenue exceeded Wall Street’s estimates by 8.9%.

Looking ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Brunswick’s operating margin has been trending down over the last 12 months and averaged 3.2% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

In Q3, Brunswick generated an operating margin profit margin of negative 17.8%, down 25.5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Brunswick, its EPS declined by 8.5% annually over the last five years while its revenue grew by 4.8%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

In Q3, Brunswick reported adjusted EPS of $0.97, down from $1.17 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Brunswick’s full-year EPS of $2.93 to grow 42.4%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Brunswick has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 8%, subpar for a consumer discretionary business.

Brunswick’s free cash flow clocked in at $148.4 million in Q3, equivalent to a 10.9% margin. This result was good as its margin was 8.4 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends trump fluctuations.

Over the next year, analysts predict Brunswick’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 12.2% for the last 12 months will decrease to 5.3%.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Brunswick’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 16.1%, slightly better than typical consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Brunswick’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Brunswick reported $316.4 million of cash and $2.19 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $645.4 million of EBITDA over the last 12 months, we view Brunswick’s 2.9× net-debt-to-EBITDA ratio as safe. We also see its $111.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Brunswick blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $65.05 immediately following the results.

Updated: December 4, 2025 at 9:08 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Brunswick.

We see the value of companies helping consumers, but in the case of Brunswick, we’re out. First off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its Forecasted free cash flow margin suggests the company will ramp up its investments next year. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Brunswick’s P/E ratio based on the next 12 months is 17.6x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $74.53 on the company (compared to the current share price of $69.73).