Can BRP's (TSX:DOO) Soaring Profits Attract Investors?

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Can BRP's (TSX:DOO) Soaring Profits Attract Investors?

 Can BRP's (TSX:DOO) Soaring Profits Attract Investors?
Image source: JomNicha, Shutterstock

Canadian manufacturing company BRP Inc (TSX:DOO) reported higher profits for the first quarter of fiscal 2022 and a robust outlook for the fiscal year on Thursday, June 3.

In the wake of this announcement, its stocks soared over one per cent earlier in the morning (9:30AM EST). Later in the day, however, BRP stock reflected a dip of about five per cent (11.22AM EST).

The vehicle manufacturing firm posted a net income of C$ 244.4 million in Q1 FY22, as against a loss of C$ 226.1 million a year ago. Its top line was up 47 per cent year-over-year (YoY) to nearly C$ 1.81 billion for the first fiscal quarter, as compared with C$ 1.23 million in Q1 FY21.

The snowmobile producer registered a profit of C$ 2.79 per diluted share in Q1 FY22, up versus a loss of C$ 2.58 per diluted in Q1 FY21. On a normalized basis, its diluted earnings per share zoomed 873 per cent YoY.

Let us glance at its price performance and guidance for fiscal 2022.

BRP Inc (TSX:DOO)

A manufacturer of snow vehicle Ski-Doo and watercraft Sea-Doo, BRP Inc reportedly exports its products to nearly 130 countries. Its market cap is C$ 3.93 billion and its previous close price was C$ 98.72 apiece.

The share price of recreational products maker has improved by more than 17 per cent this year. It has also grown over 86 per cent in one year.

Its 10-day volume average of 254,190, however, is down compared with the 30-day trading volume average of 286,541 shares.

At the previous closing price, BRP stock was up almost 14 per cent from the 200-day simple moving average, signifying a long-term uptrend.

BRP's One-Year Price Performance Against Moving Average Multiple and Volume. (Source: Refinitiv)

The mid-cap stock has dropped below its short-term moving average multiple, showing a bearish movement. However, strong guidance and robust earnings could bolster its price performance in the upcoming trading sessions.

BRP’s Outlook For FY22

In its guidance for fiscal 2022, BRP reported that it expects a top line to rise in the range of 28 per cent to 33 per cent against previous growth forecast between 25 per cent and 30 per cent.

The firm also anticipated its normalized earnings per diluted share to grow in the range of $7.75 apiece to C$$ 8.50 apiece, up against the previous expectation of C$ 7.25 piece to C$ 8 apiece.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.

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