MarineMax (HZO)

Boat and marine products retailer MarineMax (NYSE:HZO) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 13.3% year on year to $657.2 million. Its non-GAAP profit of $0.49 per share was 58.4% below analysts’ consensus estimates.

Company Overview

Appropriately headquartered in Clearwater, Florida, MarineMax (NYSE:HZO) sells boats, yachts, and other marine products.

Retailers that sell boats and marine products sell products, sure, but they also sell an image and lifestyle to an often wealthier customer. Unlike a car–which many use daily to get to/from work and to run personal and family errands–a boat or yacht is certainly a discretionary, luxury, nice-to-have purchase. While there is online competition, especially for research and discovery, the boat and yacht market is still very brick-and-mortar based given the magnitude of the purchase and the logistical costs associated with moving these products over long distances.

Competitors offering recreational marine products include OneWater Marine (NASDAQ:ONEW), Yamaha Motor Co. (TSE:7272), and Brunswick Corp (NYSE:BC).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $2.32 billion in revenue over the past 12 months, MarineMax is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.

As you can see below, MarineMax’s sales grew at a decent 11% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) despite closing stores.

This quarter, MarineMax missed Wall Street’s estimates and reported a rather uninspiring 13.3% year-on-year revenue decline, generating $657.2 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last six years. Still, this projection is noteworthy and suggests the market is forecasting success for its products.

Number of Stores

MarineMax operated 70 locations in the latest quarter. Over the last two years, the company has generally closed its stores, averaging 4.1% annual declines.

When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.

MarineMax’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and MarineMax is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).

In the latest quarter, MarineMax’s same-store sales fell by 9% year on year. This decline was a reversal from its historical levels.

MarineMax has bad unit economics for a retailer, giving it less room to reinvest and grow its presence. As you can see below, it averaged a 32.7% gross margin over the last two years. Said differently, MarineMax had to pay a chunky $67.31 to its suppliers for every $100 in revenue.

MarineMax’s gross profit margin came in at 30.4% this quarter, down 1.6 percentage points year on year and missing analysts’ estimates by 1.8%. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

MarineMax was profitable over the last two years but held back by its large cost base. Its average operating margin of 3.8% was weak for a consumer retail business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, MarineMax’s operating margin decreased by 3.5 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. MarineMax’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, MarineMax generated an operating margin profit margin of negative 6.3%, down 14.4 percentage points year on year. Since MarineMax’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

MarineMax’s full-year EPS dropped 104%, or 15.4% annually, over the last five years. In a mature sector such as consumer retail, we tend to steer our readers away from companies with falling EPS because it could imply changing secular trends and preferences. If the tide turns unexpectedly, MarineMax’s low margin of safety could leave its stock price susceptible to large downswings.

In Q2, MarineMax reported EPS at $0.49, down from $1.51 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects MarineMax’s full-year EPS of $1.13 to grow 133%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

MarineMax’s demanding reinvestments have consumed many resources over the last two years, contributing to an average free cash flow margin of negative 5.6%. This means it lit $5.64 of cash on fire for every $100 in revenue.

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).

MarineMax’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 15.1%, slightly better than typical consumer retail business.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

MarineMax’s $1.27 billion of debt exceeds the $151 million of cash on its balance sheet. Furthermore, its 9× net-debt-to-EBITDA ratio (based on its EBITDA of $126.1 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. MarineMax could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope MarineMax can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We struggled to find many positives in these results as it missed badly across all key metrics and lowered its full-year EPS and EBITDA guidance. Overall, this quarter could have been better. The stock traded down 22.1% to $21.31 immediately after reporting.

Updated: November 11, 2025 at 9:41 PM EST

Before making an investment decision, investors should account for MarineMax’s business fundamentals and valuation in addition to what happened in the latest quarter.

We see the value of companies helping consumers, but in the case of MarineMax, we’re out. Although its revenue growth was decent over the last six years, it’s expected to deteriorate over the next 12 months and its declining physical locations suggests its demand is falling. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its brand caters to a niche market.

MarineMax’s P/E ratio based on the next 12 months is 14.9x. This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $30.17 on the company (compared to the current share price of $23.53).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.