I am optimistic about the future of OneWater (A NEW). Although the company is a young company, it has grown enormously in a short time. It acquired many large chains and became a company with a wide range of holdings.
It operates in 15 states and 75 outlets, alongside several online marketplaces. The company is one of the world’s largest marine specialty retailers.
OneWater provides various boat-related services, such as financing, insurance and repairs. It offers new boats from several manufacturers and trade-in services.
The company sells boats of all shapes and sizes, but its current revenue is not dependent on any particular manufacturer. It also offers delivery services for all types of boats and after-sales service for its products.
OneWater’s business strategy is to make acquisitions as quickly as possible. The company is also adding locations that cater to different needs to give consumers more options when shopping.
As with most businesses, the pandemic has temporarily curtailed OneWater’s plans. However, the long-term impact of his efforts on the business is more positive than it might otherwise have been.
Boating has become hugely popular in the wake of the pandemic, and growing demand for outdoor activities has boosted OneWater’s long-term profile.
Enthusiasts seeking rest and relaxation have turned to boating as an alternative to other forms of entertainment that involve too much physical contact with others. Therefore, in the short and long term, OneWater is undervalued relative to its potential.
First quarter results highlight OneWater’s strengths
OneWater Marine announced first quarter results with impressive revenue performance and share gains across its metrics.
Revenue is up 57% so far this year, adjusted EBITDA is up 146% year over year and net income is up 99% year over year. OneWater Marine also continued its acquisition strategy. Recently, it acquired Quality Boats and JIF Marine to strengthen its portfolio.
In 2022, management expects high single-digit same-store sales despite ongoing inventory issues. The M&A pipeline for OneWater remains strong and it will seek to execute 4-6 concession deals and 2-4 parts and services transactions per year.
Where is OneWater going?
OneWater believes consumer demand will remain high and sees pre-sold inventory remaining high for at least another quarter.
Boat upgrades have become more common with the growing popularity of new technologies. The customers are very motivated to improve the boats and go out on the lake to test everything.
High-margin parts and other revenue saw an impressive 111% increase in the quarter. Acquisitions like these are key drivers of recent growth, which is felt in both same-store results and overall.
The number of boats on the water has increased at an explosive rate, and this is a strong sign that its strategy of entering new sectors to generate more value at all levels is working.
OneWater faces competition from smaller, local businesses that have fewer locations. Competition is sometimes intense and these businesses can be a challenge for OneWater customers.
OneWater provides a variety of products and services, including plumbing repairs and sporting goods. The company competes with others who offer something similar, such as other plumbing companies.
OneWater has a competitive advantage when it comes to product selection. It can reach more customers with the company’s range of offerings, rather than just competing for a smaller pool of customers.
OneWater is in an excellent position to capitalize on a range of opportunities that smaller retailers cannot offer due to lack of diverse resources.
What are the risks ?
OneWater estimates that a significant portion of the retail dealership market includes smaller franchises (4,300 stores) nationwide. They are generally not as good in terms of the brands, products and services they can provide. Therefore, companies such as OneWater have the opportunity to compete with them for their customers’ business.
Rapid growth and acquisitions could raise concerns, but the company is cautious in its approach. The company wishes to maintain an honest and fair reputation in its acquisition process thus far. OneWater is looking for talented people to continue the operations of the company acquired through its valuable experience.
OneWater can acquire businesses and quickly expand its market reach through its various acquisition models. If there are no attractive acquisition targets available, OneWater will consider opening its own site to continue to grow.
Additionally, e-commerce websites have the potential to provide another avenue for sales growth that can help increase a company’s bottom line.
The Taking of Wall Street
Due to the broader economic downturn earlier this year, OneWater has not fared very well. However, sentiment on Wall Street for the stock is bullish.
OneWater holds a moderate buy consensus rating based on two purchases given in the last three months. ONEW’s average price target is $59, implying an upside potential of 72.2%.
OneWater is at the top of its game. While it was initially a small chain, it then enjoyed much more success and took over from other operators by adapting to the needs of its customers.
OneWater is growing rapidly and its in-store presence is growing rapidly. It allows for larger inventories at a lower cost and is ideal for online browsing. This will only fuel the fire, especially the e-commerce capabilities, which will propel his business into the future.
With diversified revenues and rising net profit margins, the company has improved its financial outlook. OneWater was recently able to complete the acquisition of TH Marine, giving it strong bonuses for this effective strategy.
Overall the company is in a good place and will only get better from here.
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