What a brutal six months it’s been for Malibu Boats. The stock has dropped 27.9% and now trades at $31.48, rattling many shareholders. This may have investors wondering how to approach the situation.
Is now the time to buy Malibu Boats, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Malibu Boats Will Underperform?
Even with the cheaper entry price, we don't have much confidence in Malibu Boats. Here are three reasons why you should be careful with MBUU and a stock we'd rather own.
1. Decline in Boats Sold Points to Weak Demand
Revenue growth can be broken down into changes in price and volume (for companies like Malibu Boats, our preferred volume metric is boats sold). While both are important, the latter is the most critical to analyze because prices have a ceiling.
Malibu Boats’s boats sold came in at 1,431 in the latest quarter, and over the last two years, averaged 27.3% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Malibu Boats might have to lower prices or invest in product improvements to grow, factors that can hinder near-term profitability. 
2. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Malibu Boats, its EPS declined by 28.9% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
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, Malibu Boats’s ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of Malibu Boats, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 10.5× forward P/E (or $31.48 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment. We’d suggest looking at one of our top digital advertising picks.
Stocks We Would Buy Instead of Malibu Boats
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.