Malibu Boats, Inc.

MBUU Details

Malibu Boats, Inc. (NASDAQ: MBUU) is a recreational powerboat manufacturer that designs, engineers, manufactures, and markets its products through a global network of independent dealers. Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt are the eight boat brands sold by the firm. Malibu, Saltwater Fishing, and Cobalt are three of MBUU's revenue streams.

Latest News:

• Asset Acquisition Plans: Malibu Electronics, LLC, a wholly-owned subsidiary of Boats LLC, an indirect subsidiary of MBUU, agreed to an immaterial asset acquisition agreement with AmTech, LLC, and BTR, LLC, an Alabama limited liability corporation, on February 1, 2022. The business continues its vertical integration plan by acquiring its primary supplier of wire harnesses for Malibu and Axis boats. The transaction should be completed in Q3FY22.

Q2FY22 Results:

• Uptick in Revenue: Owing to a better model mix and improved unit volumes principally due to the acquisition of Maverick Boat Group on December 31, 2020, the firm reported a 34.88% rise in net sales to USD 263.89 million in Q2FY22 (ended December 31, 2021) compared to USD 195.65 million in Q2FY21.
• Progress in Net Income: MBUU recorded an increase in net income to USD 30.983 million in Q2FY22 vs. USD 22.15 million in Q2FY21.
• Growth in Volumes: The company reported an increase in volumes to 2,073 units in Q2FY22 from 1,742 units in Q2FY21.

Key Risks:          

• Dealer Concentration Risk: MBUU's top ten dealers contributed 38.7%, 38.5%, and 39.6% of net sales in FY21, FY20, and FY19, respectively. The company's financial and operational health may be compromised in the future if it becomes overly reliant on a few dealers for revenue.

Outlook:

• FY22 Estimates: As of February 08, 2022, the company expects 22–24% YoY sales growth and adjusted margins of above 19.5% in FY22.

Valuation Methodology: EV/EBITDA Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

MBUU's share price has fallen 17.55% in the past six months and is currently leaning toward the slightly lower-band of the 52-week range of USD 55.28 to USD 93.00. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 81.15. Despite supply chain issues, MBUU continues to impress with its financial performance.

Considering the correction in the stock price, increase in topline and bottomline performance, dominant market position in luxury boats, asset utilization strategy, current valuation, and associated risk, we recommend a "Speculative Buy" rating on the stock at the current price of USD 66.41, down 1.83% as of February 22, 2022, 9:44 AM ET.

Three-Year Technical Price Chart (as of February 22, 2022, at 9:44 AM ET). Source: REFINITIV; Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

AlerisLife Inc.

ALR Details

AlerisLife Inc. (NASDAQ: ALR), formerly known as Five Star Senior Living Inc., provides a growing portfolio of financially flexible and choice-based residential and lifestyle services to older individuals. It managed 179 senior living communities (primarily independent and assisted living communities) with 22,768 living units as of September 30, 2021, across 29 states, including four continuing care retirement communities (CCRCs) with 625 living units that will be transitioned to new operators.

Latest News:

• New Credit Facility: ALR stated on January 31, 2022, that it had closed a USD 95 million senior secured term loan with Midcap Funding VIII Trust, of which USD 63 million was outstanding at the time. The remaining loan amounts are subject to a USD 12 million capital upgrades holdback, with USD 20 million available if specific financial benchmarks are met by mid-2023. The new loan's maturity date is January 27, 2025, with two one-year extensions available at the company's option, extending to January 27, 2026, and January 27, 2027.

Q3FY21 Results:

• Decline in Topline: ALR reported a decrease in overall revenues of 23.53% to USD 225.83 million in Q3FY21 (ended September 30, 2021) compared to USD 295.32 million in Q3FY20, owing to lower revenues across all segments.
• Healthy Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including short term investments) of USD 99.69 million and total debt of USD 11.01 million.
• Number of Outpatient Clinics: The company reported an increase in the number of outpatient clinics to 223 at the end of Q3FY21 vs. 209 at the end of Q3FY20.

Key Risks: 

• Dependence on DHC: ALR relies significantly on its partnership with DHC. DHC, for example, owned 159 of ALR's 179 elder care homes as of September 30, 2021. As a result, the termination of its management agreements with DHC, or a significant change in the contractual conditions, could have a materially adverse impact on its operations and financial status.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation 

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

ALR's stock price has fallen 55.54% in the past nine months and made a new 52-week low today. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 3.25. Due to a low free float, professional investors may not purchase enough shares of the stock, creating an opportunity for individual investors.

Considering the significant correction in the stock price in the past nine months, inorganic growth initiatives, healthy balance sheet, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 2.61, down 6.45% as of February 22, 2022.

Three-Year Technical Price Chart (as of February 22, 2022). Source: REFINITIV; Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.