On Wednesday I reviewed last year's crop of triple-nets (companies trading at between 2x and 3x net current asset value or NCAV), and today I'll begin revealing some of the current qualifiers, those that I find interesting. However, I will be tracking all 48 in the coming year, and will make that list of names available.
Johnson Outdoors (JOUT) , which makes and markets an array of fishing, camping, diving and watercraft products currently trades at 2.85x NCAV. JOUT qualifies as a triple-net primarily due to the stock's 30+% retreat since late April. Shares topped out above $104 in August of 2018 but its' been mostly downhill since. Earnings have been all over the map the past two quarters with the company posting a nice earnings beat for the second quarter ($2.18 per share versus $1.83 consensus), and then missing third quarter consensus estimates ($2.19 vs. $2.37 consensus).
JOUT currently trades at about 13.5x next year's consensus earnings estimates. However, it is not a large consensus as just two analysts currently follow the name. Due to the seasonal nature of the business, the bulk of revenue - 62% last year - is generated in the second and third quarters. The balance sheet is solid, JOUT ended its latest quarter with $149 million or $14.89 per share in cash and no debt.
Sticking to the "outdoors and recreation" theme, boating retailer MarineMax (HZO) also looks intriguing. Shares are down about 20% year-to-date, and boating stocks are not exactly in favor. Back in late July the sector took a hit upon the announcement of weak sales data. That happened again last month when MasterCraft (MCFT) issued weak guidance. However, HZO currently trades at just 2.35x net current asset value, and 9x next year's consensus earnings estimates.
The company has more than $3 per share in cash on the balance sheet, however it does finance its inventory and working capital through short-term debt, to the tune of $290 million, which does give me some concerns.
On another note, in July, the company announced that it was buying Fraser Yachts Group from Italian company Azimut/Benetti Group. While that deal is expected to be accretive in the first full year, HZO has not revealed terms of the deal, but that information should be available with the release of fourth quarter earnings in early November.
Stay tuned for more triple-nets, and enjoy the weekend.
