Shares of MasterCraft Boat Holdings Inc. (MCFT) took a hit on Wednesday, although they managed to recover from their lowest point of the day. The recreational-powerboat manufacturer hinted at potential upside to its disappointing full-year outlook.
At one point during afternoon trading, the stock was down 12.8%. However, it had reached a low of 22.9%, reaching a price of $19.25. This marked the lowest price seen since October 3, 2022.
While the company reported better-than-expected profit and sales for the fiscal fourth quarter, their full-year earnings outlook fell well below Wall Street forecasts.
Chief Executive Fred Brightbill explained the downbeat guidance, citing macroeconomic factors such as elevated interest rates and tightening credit standards and availability. These factors have created significant uncertainty, limiting retail demand visibility. Additionally, the general expectation of an economic downturn in fiscal 2024 is expected to be a headwind for the industry.
During the conference call with analysts following the earnings report, Chief Revenue Officer George Steinbarger further elaborated on the challenges facing retail demand. He highlighted tightening credit standards due to increased interest rates, resulting in higher monthly payments and making it difficult for some consumers to secure financing.
Despite the stock’s initial decline, investors can find some solace in MasterCraft Boat Holdings Inc.’s optimistic outlook for potential improvements in their full-year performance.
MasterCraft’s Full-Year Guidance Reflects Current Conditions
MasterCraft, a leading boat manufacturer, recently provided a full-year guidance that accounts for the prevailing market conditions. In a recent call, Brightbill, a representative of MasterCraft, explained that the guidance assumes a continued state of moderate economic performance.
“Our plan considers the ongoing stagnation we are currently experiencing. While we do not anticipate significant improvements, we are also not foreseeing any major setbacks,” Brightbill stated during the call.
However, Brightbill added that if the economy’s worst days are indeed behind us and there is a potential upturn, coupled with a decline in interest rates by next summer, MasterCraft’s outlook may improve.
This update from MasterCraft follows the recent release of rival company Malibu Boats Inc.’s fourth-quarter results. Although Malibu Boats managed to beat expectations, their full-year outlook was less positive than MasterCraft’s. Consequently, Malibu Boats’ stock witnessed a decline of 1.6% on Tuesday, followed by a further 4% drop on Wednesday.
During the past three months, MasterCraft’s stock has experienced an 18.5% decrease, while Malibu Boats’ shares have seen a 5.4% decline. On the other hand, the S&P 500 index has recorded a 7.2% gain over the same period.
Overall, MasterCraft’s guidance reveals a cautious approach that acknowledges the current state of affairs while leaving room for potential growth in the future.