BRP Inc. (DOOO), a leading powersports vehicle manufacturer, saw its stock soar by 5.31% on September 11, 2024. This surge in share price appears to be driven by a bullish thesis circulating among investors, highlighting the company's impressive growth and potential for further upside.
According to the thesis, BRP has experienced substantial revenue and EBITDA growth since the COVID-19 pandemic, with revenue surging by approximately 78% and EBITDA increasing by an impressive 127% over the past year. Despite this remarkable performance, the company's valuation remains historically low, trading at just 5.4 times its adjusted EBITDA, significantly lower than its pre-COVID average multiple of 9.2 times.
The thesis further highlights that the powersports industry has undergone structural changes that reduce its cyclicality, making BRP's earnings more resilient than the market anticipates. The shift towards utility-oriented side-by-side vehicles (SSVs), which now account for over 60% of industry units, suggests a reduced cyclicality in the industry. Additionally, the consolidation of the powersports dealer market since the Global Financial Crisis has strengthened the industry's resilience, providing a solid foundation for BRP's continued success.
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